US Cash Products-Cold weather supports NYH heat oil

NEW YORK, Dec 23 (Reuters) - Frigid temperatures gripping the U.S. Northeast gave another boost to heating oil price differentials in the New York Harbor on Tuesday, helping counter the weak futures benchmark, traders said.

Forecaster DTN Meteorlogix said temperatures in the Northeast averaged 8-12 F (4-6 C) below normal in the past 24 hours but will rise for the rest of the week. [ID:nDTN410]

"The recent Northeast cold snap seems to be providing the heating oil market with some support, although temperatures are expected to moderate in the week ahead," noted Tim Evans, an energy analyst at Citi Futures Perspective.

Colonial Pipeline said on Tuesday it will allocate distillate shipments on Line 2 north of Collins, Mississippi, for the second cycle of 2009. [ID:nN23528432]

Valero said there was no impact to production from boiler and sulfur plant upsets at its 210,000 barrel per day refinery in Delaware City, Delaware. [ID:nN23201811]

U.S. crude and products futures fell sharply on concerns over falling oil demand in a weak economy but trading was thin ahead of Christmas holiday. [O/N]

Analysts expect government data on Wednesday to show U.S. crude oil and refined fuel stocks rose for the third week last week due to weak consumer demand and as dealers topped off storage to take advantage of a contango price structure.

"Consensus expectations are for inventories to build ... but we see potential for seasonal draws in crude oil and distillate, which could spark some light short covering," said Evans, noting market reaction may be muted with traders reluctant to take on new positions until January.

For a list of refinery outages/restarts, click [REF/US]