Market Insider

Storm Sends Fuel Prices to Fresh 2013 Highs

Storm Sends Fuel Prices to Fresh 2013 Highs

The storm pounding the Northeast is pushing fuel prices higher, hitting consumers with a one-two punch that may send some of over the financial brink.

It's a double-whammy as soaring home heating costs compound stretched budgets of many households that are also paying the highest gasoline prices on record for this time of year.

(Read More: 'Dangerous' Snowstorm Nemo Finds the Northeast.)

Nationally, retail gasoline prices have soared 11 cents in a week and nearly 30 cents in a month to $3.57 a gallon on Friday, according to AAA. Pump prices are the highest on record for early February, and are rising the fastest along the coasts. The state-wide average price of gasoline in New York is $3.92 a gallon and California gas prices on average have now surpassed the $4-a-gallon mark.

(Read More: Thousands of Flights Canceled Amid Major Blizzard.)

Meanwhile, U.S. residential home heating oil prices averaged $4.06 a gallon, as of February 4, up 5 cents in a week, according to the U.S. Energy Information Administration (EIA). Only 6 percent of U.S. households use home heating oil, but 80 percent of those homes are in the Northeast.

The massive storm approaches the East Coast on Friday morning.
Source: NASA

The EIA says over the last 8 winters, residential heating oil prices have increased more than retail gasoline. This year may see a continuation of this trend.

"Home heating oil prices right now are highest that we've seen in the last couple of years," said energy analyst Tom Kloza of the Oil Price Information Service.

(Read More: Nat Gas Plunges Despite Impending Northeast Winter Storm.)

Home heating oil prices are already 2 percent higher than a year ago. Those prices may continue to climb based on gains in the futures market. Heating oil futures traded on the New York Mercantile Exchange have lead gains in the energy market this week, climbing 3 percent to nearly $3.26 a gallon. Gasoline futures are basically unchanged on the week at $3.06 a gallon.

The price of foreign oil, imported to U.S. refineries to make into gasoline, heating oil and other fuels, has helped to push up prices here. North Sea Brent crude futures—the global benchmark for petroleum and fuel prices worldwide—surged to a 9-month high on Friday to more than $119 a barrel. "The biggest impact that we're seeing in gasoline and heating oil is the rise in Brent crude prices due to reduced supplies from OPEC countries and record levels of crude oil being imported in China," said Houston-based energy analyst Andy Lipow.

(Read More: Consumers Taking Financial Hit From Rising Fuel Prices.)

Northeast Braces For Nemo

Chinese crude oil imports rose to the third highest daily rate on record in January, and overall exports and imports were much higher than expected last month, according to trade data.

"Chinese growth is stronger than people anticipated," said Gene McGillian, a broker and analyst at Tradition Energy in Stamford, Conn. "Now we're talking about maintenance programs (and repairs of oil facilities) in the North Sea. That's all taking prices higher."

Some analysts said the first major snow storm of 2013 only intensifies traders' instinct to buy futures contracts for refined fuels as some worry about reduced supplies due to the weather.

"People remember Superstorm Sandy and they're fueling up en masse from New York to Boston," Kloza said. "They know they need gasoline to fuel electricity. The threat of no electricity in pumping stations and no electricity in New England to keep fuel supply terminals open" is adding to the price surge. "But mostly it's pure panic," he added.

Indeed, there may be some supply disruptions due to the storm.

"Clearly the vessels are going to be delayed getting into New York Harbor. They won't be able to continue their operations on Saturday," Lipow said.

But fuel demand should decline as well as many people stay home through the storm. With fewer drivers on the road as well as canceled flights and trains, "ultimately this event will be a demand destroyer as opposed to a supply destroyer," Kloza said.

—By CNBC's Sharon Epperson; Follow her on Twitter: