Crude and heating oil prices both fell 2.5% from their morning increases in reaction to U.S. inventory data released by the EIA at 10:35 am eastern time.  Although the increase in crude oil stocks was smaller than expected (0.4 million barrels vs. predictions of a 1.1 million barrel increase), gasoline and distillate stocks rose by several million barrels following predictions of stock decreases.

The effects of the data were immediately apparent on the oil markets, but could be counteracted in the last four hours of trading.

Oil prices are climbing this morning, stimulated by the Chinese government’s fourth interest rate cut in the last ten weeks–an attempt to re-ignite economic growth in the country.  Crude and heating oil were both up 2% as of 9:45 am eastern time.

Analysts believe the interest cuts could stimulate fuel demand in China, the world’s fastest-growing economy.  From Bloomberg.com:

“The combined fiscal and now monetary push will help to avoid a hard landing in China, and thus remains supportive of its oil-demand growth,” said Harry Tchilinguirian, senior oil analyst at BNP Paribas SA in London.

Russia also did its part to drive oil prices up, announcing that it will cooperate with OPEC in the near future in efforts to boost falling prices.  The announcement did not specify the nature of Russian cooperation, but a production cut is a definite possibility.  From Bloomberg.com:

“Russia is being more cooperative like they were about 10 years ago and it would be bullish if they cut output along with OPEC,” said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “It’s already expected OPEC will cut, but the unknown is the depth of it.”

HEAT USA price experts confirmed a sizable decrease in retail heating oil prices today, and noted that, despite this morning’s price gains, a forthcoming report on U.S. petroleum stockpiles could drive prices down later today.

HEAT USA Price Report
Today’s average retail heating oil price per gallon: DOWN $0.07 to $0.08
Morning projection (for Thursday’s/Friday’s price per gallon): UP $0.04 to $0.05

The price of crude fell about 2% today to $53.15 a barrel as of 3:51 pm eastern time.  The price for a gallon of heating oil stayed relatively flat, gaining about half a cent but holding at $1.76 on NYMEX.  The divergence in price changes is an effect of today’s data on US inventories that showed crude and gasoline stockpiles rose more than expected while distillates (used to make diesel and heating oil) dropped after predictions that they would increase.

HEAT USA price experts explained that the decrease in distillate stockpiles was most likely a result of heating oil users around the country filling their tanks in anticipation of cold weather.  They expect a fractional to small increase in prices tomorrow.

HEAT USA Price Report
Evening Projection (for Thursday’s average price per gallon): UP $0.005 to $0.01

Crude and heating oil prices remained near their Tuesday closing prices on NYMEX this morning.  Traders and analysts appear to be holding their collective breath until the release of new inventory numbers at 10:35 am eastern time.  Crude and heating oil prices were up 1% and 2%, respectively, as of 9:31 am.

HEAT USA price experts announced a decrease in retail heating oil prices from yesterday that is a penny smaller than expected, and anticipated a small gain in tomorrow’s prices.

HEAT USA Price Report
Today’s average heating oil price per gallon: DOWN $0.03
Morning projection (for Thursday’s average price per gallon): DOWN $0.02