Crude Prices Rally; Heating Oil Hits Record

Crude futures moved higher Tuesday, drawn by record high heating oil futures on the New York Mercantile Exchange.

West Texas crude for June delivery was recently up $1.39 at $125.62 a barrel, and Brent crude was adding 84 cents at $123.75 a barrel.

Reformulated gasoline was 3 cents higher at $3.20 a gallon, and heating oil advanced 11 cents to $3.67 a gallon. Near-term natural gas rose 22 cents to $11.52 per million British thermal units.

Low heating oil supplies in U.S. population centers have pushed heating oil prices to record highs. According to Jim Williams, energy economist at WTRG Economics, crude prices that normally track motor gasoline are now tracking heating oil instead.

Strength in the heating oil market was able to overcome somewhat bearish news released by the International Energy Agency. According to the IEA's monthly oil report, demand for petroleum will approximate 86.84 million barrels a day in 2008, 390,000 barrels lower than the group's previous forecast.

Cramer: Petro's Going Strong

Record high oil and gas prices are responsible for the decrease in consumption, according to the IEA. Most of the effects are being felt in established markets like Europe and the U.S. However, high demand for energy in emerging markets like China would still keep overall demand for petroleum products in positive territory, according to the IEA.

Crude's advance came despite a stronger U.S. dollar and a Senate vote to suspend deliveries to the nation's strategic petroleum reserve until oil trades below $75 a barrel for 90 days. By increasing the market's supply, the measure, if it ultimately is put into effect, could dampen prices a bit.