US petrol, heating oil futures up as Sandy fuels safe-haven buys

US petrol and heating oil futures gained and US treasuries also rose yesterday, as economic worries over Hurricane Sandy fuelled safe-haven buying in thin trading volume as the powerful storm began to batter the US east coast.

The storm closed Wall St on the anniversary of the 1929 stock market crash. It was the market’s first weather-related closure in 27 years, and other markets closed early as investors braced for the impact of Sandy, one of the biggest storms ever to slam the US eastern seaboard.

US stock market executives, regulators and brokers agreed to close markets again today but a final decision has not been made yet to reopen tomorrow. Bond markets closed at noon EDT and will not reopen today, a trade group said.

Trading was thin in US foreign exchange, fixed income, precious metals, and energy markets. “People are trying to figure out the economic impact from the storm,” said Larry Milstein, head of government and agency trading at RW Pressprich & Co in New York. “Right now it’s the easy way to buy Treasuries and wait to see what happens.”

Benchmark US 10-year treasury notes traded 8/32 higher in price to yield 1.72%.

US heating oil futures gained, touching the highest level relative to US crude oil on record, as dealers hedged against the risk of power outages and flooding from Sandy 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 gasoil inventories as we move into winter season,” Deutsche Bank analysts said.

Gasoline futures reached $2.8115 a gallon, the highest since Oct 17, before paring gains as traders factored in the reduced demand for fuel with the almost total shutdown of eastern seaboard roads and airports.

European stocks fell on yesterday, led by insurers, on expectations Sandy-related damage will boost claims, while political jitters in debt-laden Italy cast shadows on the euro zone.

Reinsurers Swiss Re and Hannover RE led a weaker European insurance sector index as the market tried to foresee the clean-up costs of Sandy. “We are seeing insurers slide and we’ve sold a bit of Aviva and RSA,” said Ed Woolfitt, head of trading at Galvan Research.

Eurozone blue chips shed 0.7% to 2,478.84 points after former Italian prime minister Silvio Berlusconi threatened to bring down the government of his successor, Mario Monti, which has appeased markets with its austerity agenda. The broader MSCI world equity index lost 0.26% to 327.74 points — on track for its worst monthly performance since May as doubts grow over the effect of the latest round of central bank efforts to boost activity.

The euro fell against the dollar and yen, hurt by uncertainty over whether Greece can agree to a deal on austerity and with no sign of when Spain might request aid.

The single currency was expected to stay subdued against the dollar and the yen, with investors preferring safe-haven currencies on renewed worries about weak earnings from top companies.

The single currency was down 0.3% at $1.2898, 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 today at which the central bank is expected to further ease monetary policy. The dollar was last up 0.2% at 79.80, the session peak.

US consumer spending rose solidly in September, putting the economy on a firmer footing heading into the fourth quarter, even though households had to pull back on saving to fund purchases.

The commerce department said that consumer spending rose 0.8%, the largest increase since February, after an unrevised 0.5% gain in August.

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