FX.co ★ Heating Oil Resumes Downturn

Heating oil futures in the United States have fallen below $2.30 per gallon, continuing their decline from the five-month high of $2.60 reached on June 19th. This drop is attributed to decreasing feedstock costs, the result of diminishing geopolitical tensions and an increase in supply that has outstripped consumption. The recent truce between Israel and Iran has removed the temporary wartime premium that had previously supported the costs of feedstock sourced from the Middle East. Additionally, OPEC+ has announced plans to increase production by 411,000 barrels per day in August, following a similar increase in July, which has collectively boosted total production by nearly 1.8 million barrels daily this year. This influx of additional crude oil has contributed to greater distillate and heating-oil output. On the demand side, China's manufacturing Purchasing Managers' Index (PMI) has stayed below the 50-point growth threshold for three consecutive months, indicating weaker consumption of industrial and transportation fuels.