FINANCIAL MARKETS : Heating Fuel Prices Drop; Stocks Inch Up
Prices for heating fuels tumbled Monday as forecasts for warm weather raised the prospect of falling demand for fuels that are already in copious supply throughout the country. Meanwhile, the stock markets inched upward and bond and dollar trading produced only minor price changes.
Natural gas futures plunged 5.4% while heating oil dropped 2.1% in trading on the New York Mercantile Exchange.
“We have warmer weather coming in here and that could take out the demand,” said Andrew McMillan at Barclays de Zoete Wedd.
Temperatures in the Northeast and Midwest, where heating needs are greatest, are expected to rise 5 to 15 degrees Fahrenheit above average beginning Wednesday, according to Weather Services Corp.
March natural gas futures tumbled 8 cents to $1.39 a million British thermal units while heating oil for March delivery fell 0.99 cent to 47.29 cents a gallon.
Natural gas is used to heat about 53% of the 93 million U.S. homes that are heated, while heating oil is used in about 11%, according to the Department of Energy.
While frigid temperatures have prevailed for the past two weeks, traders said the cold snap didn’t last long enough to trim a surplus of heating fuel supplies.
U.S. supplies of natural gas are 52% greater than they were a year ago, according to the American Gas Association. Heating oil inventories are 8.8% larger than last year, according to the American Petroleum Institute.
Copper prices also fell Monday as a perceived slowdown in U.S. economic growth clouded the outlook for increased industrial demand.
In the stock markets, blue-chip stocks ended with moderate gains Monday as some investors bet upcoming economic reports will confirm the economy is slowing and will deter the Federal Reserve from raising interest rates again.
The Dow Jones industrial average ended up 15.14 points at 3,954.21. Standard & Poor’s 500 stock index inched up 0.19 of a point to 481.65, just shy of the 482.00 record set Feb. 2, 1994.
“People are just biding their time,” said Richard Meyer, manager of institutional trading at Ladenberg, Thalmann. The January retail sales report is set for release on today. The Consumer Price Index and capacity utilization for January--two key inflation measures--will be released on Wednesday.
Only about 50 stocks separated advancing and declining issues on the Big Board, with 1,144 up, 1,091 down and 726 unchanged.
The hesitant stance also was evident in the bond market. In late trading, interest rates were nudged up a bit. The main 30-year Treasury bond was trading to yield 7.67%, up from 7.65% late Friday.
Ever since January’s employment report depicted surprising weakness, the markets have been waiting for similar signs.
Looking beyond this week’s data, Charles Crane, director of research for the investment management firm Spears, Benzak, Salomon & Farrell, said: “The $64,000 question is ‘can earnings continue to move ahead in 1995 and 1996 while the economy decelerates?’ ”
Among market highlights:
* Southwest Airlines fell 1 1/8 to 17 1/4. The airline reportedly has warned that competition and operating problems on new routes will weigh down results.
* There were few industry patterns but many individual stock movements Monday. General Motors gained 3/8 to 40 1/4, buoyed by an upgrading by Salomon Bros. The brokerage house cited a greater degree of confidence in the auto maker’s earnings and a possible dividend boost later this year.
Revco D.S. Inc., which operates a chain of drug stores, ended down 1 1/4 to 21 7/8 after Morgan Stanley downgraded its opinion of the firm.
On the Nasdaq, General Magic slumped 4 1/8 to 22 1/2, retreating from the level reached last week when its first day of trading attracted eager investors who snapped up the new issue.
Action overseas didn’t offer much to inspire Wall Streeters. Most major foreign stock markets pulled back although Tokyo managed to eke out a small gain.
Stocks in London ended sharply lower while more moderate declines occurred in Frankfurt and Paris.
