FX.co ★ Heating Oil Rebounds on Trade Optimism

US heating oil futures have risen above $2.05 per gallon, recovering from the nearly four-year low of $1.975 seen on May 7th. This increase comes as the energy markets adjust to a balance between improving demand prospects and ongoing supply-side uncertainties. Optimism around the anticipated US–China trade discussions and the recent US–UK agreement has alleviated some fears of a global economic slowdown, consequently boosting consumption expectations in significant economies. Notably, China's crude oil imports in April saw an unexpected 7.5% increase compared to the previous year, indicating robust refinery operations. In the United States, a larger-than-expected reduction of over two million barrels from crude inventories has supported the view of tightening domestic demand. Although OPEC+ has reiterated plans to increase production, a combination of voluntary cuts and persistent disruptions in Libya, Venezuela, and Iraq continue to spotlight supply concerns. In the meantime, US distillate fuel stocks fell by 1.11 million barrels in the week ending May 2nd, falling short of predictions, while heating oil inventories experienced a modest increase of 123,000 barrels.