Crude also advanced as heating oil jumped on forecasts for cold weather on the U.S. East Coast and in the Midwest next week. About 26 percent of households in the Northeast use heating oil for heating, according to the EIA.
Computer models show that temperatures across the regions will be 5 degrees Fahrenheit (2.8 Celsius) below normal from Jan. 19 to Jan. 23, said Matt Rogers, president of Commodity Weather Group LLC in Bethesda, Maryland. The low in New York on Jan. 22 may be 16 degrees Fahrenheit, 11 below normal, according to AccuWeather Inc. in State College, Pennsylvania.
Heating oil for February delivery climbed 5.40 cents, or 1.8 percent, to end at $3.0625 a gallon on the Nymex, the biggest gain since Nov. 19.
Prices extended gains as the Standard & Poor’s 500 Index pared losses. The index was little changed after falling as much as 0.4 percent earlier.
“Oil is following the equities,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “Seaway will help reduce the Cushing supply.”
Crude fell as much as 0.7 percent earlier as the S&P 500 dropped and on concern political disagreements over the nation’s debt ceiling that may affect economic growth.
President Barack Obama warned Congress against using the debt ceiling as leverage in the spending debate, saying “markets could go haywire” and government payments, from Social Security checks to military salaries, will be held up if the limit isn’t raised.
Republican lawmakers “will not collect a ransom” if they delay increasing federal borrowing authority, Obama said today at a White House news conference.
“The oil market is a little nervous about the debt ceiling, and people covered their positions,” Flynn said.
Electronic trading volume on the Nymex was 497,274 contracts as of 3:30 p.m. Volume totaled 604,531 contracts on Jan. 11, 25 percent above the three-month average. Open interest was 1.50 million.