March 21, 2023

Gas and Oil Futures Rise as Investors Take Cover

Gasoline and heating oil futures gained on Monday while United States Treasuries also rose, as economic worries over Hurricane Sandy fueled safe-haven buying in thin trading as the powerful storm began to batter the East Coast.

The storm forced Wall Street to close on the anniversary of the 1929 stock market crash. It was the stock market’s first weather-related closure in 27 years, and other markets closed early as investors braced for the impact of the hurricane, one of the biggest storms ever to slam the Eastern Seaboard.

In Europe, stocks, led by insurers, fell on expectations that damage related to the storm would increase claims, while political jitters in debt-laden Italy cast shadows on the euro zone. The reinsurers Swiss Re and Hannover RE led a weaker European insurance sector index.

“We are seeing insurers slide and we’ve sold a bit of Aviva and RSA,” said Ed Woolfitt, head of trading at Galvan Research.

The blue-chip Euro Stoxx 50 index fell 0.7 percent, to 2,478.84, after Silvio Berlusconi, the former prime minister of Italy, threatened to bring down the government of his successor, Mario Monti, which has appeased markets with its austerity agenda.

In London, the FTSE 100 fell 0.2 percent, to 5,795.10. The DAX index in Germany fell 0.4 percent, to 7,203.16, and the CAC 40 in Paris slipped 0.8 percent, to 3,408.89.

The euro fell against the dollar and yen, hurt by uncertainty over whether Greece could agree to a deal on austerity and with no sign of when Spain might request aid. The euro was expected to remain subdued against the dollar and the yen, with investors preferring safe-haven currencies, with weak earnings from top companies in the region weighing on investors.

The euro was down 0.3 percent at $1.290, not far from a two-week low of $1.2881.

The dollar rose to a session high against the yen ahead of a Bank of Japan policy review on Tuesday at which the central bank is expected to further ease monetary policy.

With the storm bearing down on the East Coast, trading was thin in United States foreign exchange, fixed-income, precious metals and energy markets as public transportation was shut in New York and parts of Lower Manhattan were evacuated.

“You have uncertainties now. You have these safe-haven purchases. People are trying to figure out the economic impact from the storm,” said Larry Milstein, head of government and agency trading at R. W. Pressprich Company in New York.

“Right now it’s the easy way to buy Treasuries and wait to see what happens,” Mr. Milstein said.

The benchmark United States 10-year Treasury note traded 8/32 higher in price to yield 1.72 percent.

United States heating oil futures gained, touching the highest level relative to crude oil on record, as dealers hedged against the risk of power failures and flooding from the hurricane that could damage refineries and keep production shut for weeks.

The crack spread, the difference in value between a barrel of heating oil and a barrel of crude oil, touched $45.15 a barrel.

“Markets will be watching for reports of damage to energy infrastructure, notably refineries, post-Sandy, given the state of extremely low gas oil inventories as we move into winter season,” Deutsche Bank analysts said.

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