NEW YORK ( TheStreet) -- Heating oil futures rose on dollar weakness Thursday, as the dollar carry trade drove trading.
"I think it is really the combination of the weak dollar and ongoing concerns in Libya and the rest of the region" as well as "hot inflation" in the European Union, said PFG Best Senior Research Analyst Phil Flynn.
Heating oil for May delivery increased 1.7% to $3.106 a gallon.
On Thursday, the euro strengthened against the dollar as inflation readings crept up faster than expected in March. The region's Eurostat office said consumer prices in 17 eurozone countries increased 2.6% year-over-year in March, up from 2.4% in February. This surprised economists, who had on average, according to a Reuters poll, forecast 2.3% growth.The much hotter than expected number "backed Trichet into a wall," Flynn said of European Central Bank President Jean-Claude Trichet, who now looks all but certain to oversee a rate hike in April. This notion switched carry trades favoring the higher-yielding euro currency, whereby the investors buys then sells the lower-yielding U.S. currency. Given that heating oil is priced in dollars, dollar weakness Thursday made the commodity more expensive to buy -- the higher price reflected the greater dollar amount required to buy it.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV