Heating Oil Pops on Weak Dollar: Market Bits

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.

The euro was gaining 0.5% against the greenback at $1.4192 and the U.S. dollar index was down 0.3% to $75.87.

Oil distribution, transport and storage companies were advancing. Enbridge ( ENB) was rising 0.6% to $61.65, Plains All American Pipeline ( PAA) was up 0.2% to $63.57, Genesis Energy ( GEL) was up 1.4% to $28.33 , NuStar Energy ( NS) was up 0.2% to $67.79, Holly Energy Partners, L.P. ( HEP) was rising 1% to $57.93, TransMontaigne Partners ( TLP) was up 1% to $36.38 and Sunoco Logistics Partners ( SXL) was up 0.6% to $86.82.

(Published at 2:35 p.m.)

Wheat, corn and soybean futures popped Thursday following a bullish Department of Agriculture crop report.

Wheat prices for May delivery jumped 5.1% to $7.64 a bushel and corn for May delivery hit its daily exchange limit of 30 cents. Corn futures rose 4.5% to $6.93 ¼ a bushel. May soybeans added 3% at $14.13 1/4 a bushel.

The Department of Agriculture said on Thursday that soaring crop prices should encourage U.S. farmers to plant more corn and wheat this year than expected. The report estimates farmers will likely plant 92.2 million acres of corn, up 5% from the previous year -- greater than the market estimate of 91.7 million acres, according to online trade publication Agriculture.com.

Wheat acres are likely to total 58 million, far surpassing the 41.2 million market estimate.

Still, grain inventories will remain extremely tight, more than offsetting a larger-than-expected harvest in 2011, according to the USDA.

The higher corn plantings however could bite into oilseed supply. The USDA predicts farmers will plant 76.6 million acres of soybeans, below the market forecast of 77 million, according to Agriculture.com.

Agriculture and fertilizer stocks got a lift from the news as well.

Agricultural commodities transporter Archer Daniels Midland ( ADM) rose 1.1% to $36.32, Agrium ( AGU) gained 3.3% to $92.55, CF Industries ( CF) advanced 4% to $137.87 and Potash Corp. ( POT) rose 1.5% to $59.07.

Food and brewing companies were mixed on Thursday. Panera Bread ( PNRA) was down 0.2% to $126.53, General Mills ( GIS) was 0.1% lower at $36.70 and Boston Beer ( SAM) was up 1.4% to $92.43.

(Published at 11:19 a.m. ET)

Natural gas futures were one of the biggest commodity losers Thursday after higher inventories were reported.

Natural gas for May delivery was falling 2.7% to $4.24 per million British thermal units, after popping more than 2% the day before.

Natural gas inventories rose 12 billion cubic feet (Bcf) to 1,624 Bcf last Friday from the previous week, according to Energy Information Administration estimates Thursday. This, as demand waned during a brief reprieve from the cold last week.

Stocks were 12 Bcf less than the same time last year, yet 68 Bcf above the 5-year average of 1,556 Bcf, the EIA said.

Traders were already taking profits in natural gas ahead of the inventory numbers, said PFG Best Senior Research Analyst Phil Flynn.

Natural gas futures soared about 12% over the past month as nuclear energy suffered public relations setbacks amid the Japan crisis, cold weather persisted and President Obama reiterated his support for clean energy fuels such as natural gas during a speech on energy policy at Georgetown University Wednesday.

Natural gas stocks were mostly trading in negative territory Thursday morning.

Devon Energy ( DVN) was falling 0.1% to $91.50, Newfield Exploration ( NFX) was flat at $76.14, Cheniere Energy Partners ( CQP) was rising 1.3% to $19.10, Cheniere Energy ( LNG) was falling 1.1% to $9.28, EOG Resources ( EOG) was down 0.3% to $118.83, BP ( BP) was down 0.9% to $44.17 and Southwestern Energy ( SWN) was 0.8% lower at $42.89.

(Published at 10:26 a.m. ET)

Cotton futures have broken a three-day losing streak after expected plantings turned out to be substantially less than industry estimates.

"The USDA survey of producers showed that they intend on planting less acres to cotton than had been anticipated by the market," said veteran cotton analyst Mike Stevens.

Cotton for May delivery was rising 2.3% to $1.98 a pound. The iPath Dow Jones-UBS Cotton Subindex Total Return ETN ( BAL) was up 1.4% to $102.29.

The U.S. Department of Agriculture reported 12.6 million acres of cotton plantings for the 2011 to 2012 period. This is a substantial improvement from the year before, but 500,000 acres below the industry consensus.

"Consequently, new crop contracts are leading the charge higher," explained Andy Ryan, senior risk management consultant at FCStone Fibers & Textiles.

The analyst said cotton was holding just above major technical support.

Apparel companies that are heavy users of cotton tumbled in morning trading.

Hanesbrands ( HBI) was falling 2.2% to $26.88, Gap ( GPS) was falling 0.2% to $22.59 and Limited Brands ( LTD) was down 1.7% to $32.66.

Jones Apparel ( JNY) was down 0.4% to $13.69, V.F. Corporation ( VFC) was falling 2% to $97.19 and True Religion Apparel ( TRLG) was lower by 2.1% to $23.28.

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-- Written by Andrea Tse in New York.

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