FINANCIAL MARKETS : Heating Fuel Prices Drop; Stocks Mixed

Prices for heating fuels tumbled Monday as forecasts for warm weather in the East raised the prospect of falling demand for fuels that are already in copious supply.

Meanwhile, the stock market closed mixed while bond and dollar markets were steady, awaiting key economic data this week. The Dow industrial average added 15.14 points to 3,954.21, its highest level in more than a year, though trading was slow.

In commodities trading, natural gas futures plunged 5.4% while heating oil dropped 2.1% 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 above average beginning Wednesday.

In trading Monday, March natural gas futures tumbled 8 cents to $1.39 per 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 Assn. Heating oil inventories are 8.8% larger than last year, according to the American Petroleum Institute.

On Wall Street, blue-chip stocks inched up while smaller issues gave ground, leaving the market overall stuck in the same trading rut that prevailed last week.

Winners barely edged losers on the NYSE, and volume was a lethargic 255 million shares.

Investors’ hesitancy was also evident in the bond market. The 30-year Treasury bond yield closed at 7.67%, up from 7.65% on Friday.

With important economic reports due this week, “people are just biding their time,” said Richard Meyer, manager of institutional trading at Ladenberg Thalmann.

The government will report on January retail sales today. On Wednesday, January consumer inflation and capacity utilization figures will be released.

Ever since January’s employment report depicted surprising weakness, the markets have been waiting for similar signs to confirm investors’ hopes that interest rates may have peaked.

The risk for the markets is that this week’s data will be stronger than expected, reviving rate fears.

The stock market is vulnerable to bad news, many traders warn: The Dow is just 25 points from its all-time high; the Standard & Poor’s 500 stock index, up 0.19 point to 481.65 on Monday, is also just shy of its 482.00 record set Feb. 2, 1994.

Among Monday’s highlights:

* Transportation stocks were generally higher, following Friday’s big rally in airline issues. Federal Express jumped 2 3/8 to 64 3/8, rail giant CSX gained 1 3/8 to 74 5/8 and Consolidated Freightways added 1 1/4 to 22 3/8.

But Southwest Airlines fell 1 1/8 to 17 1/4. The company reportedly has warned that competition and operating problems on new routes will weigh down near-term earnings.

* Many software stocks were strong. System Software rose 1 1/2 to 20 5/8, Computer Associates gained 1 1/4 to 56, Sybase added 1 1/2 to 46 1/2 and Peoplesoft was up 3/4 to 37.

But General Magic, which makes software for “information highway” uses and which rocketed from 14 to 32 in its initial public stock offering last week, fell again, losing 4 1/8 to 22 1/2.

* General Motors gained 3/8 to 40 1/4. Salomon Bros. upgraded the stock, citing a greater degree of confidence in the auto maker’s earnings and a possible dividend boost later this year.

Action overseas didn’t offer much to inspire Wall Streeters. Most major foreign stock markets pulled back, though Tokyo managed to eke out a small gain.

Stocks in London ended sharply lower in advance of key economic reports. In Mexico City, the olsa index fell 38.13 points, or 1.9%, to 1,930.17 on jitters over continued political unrest.