FX.co ★ Heating Oil Rises Past $2.3

Heating oil futures in the United States have climbed above $2.30 per gallon, driven by tightening supply conditions that have overshadowed a temporary increase in stock levels, as demand for middle distillates strengthens heading into the winter months. Although U.S. crude inventories expanded by approximately 3.9 million barrels in early September, this did not translate into increased distillate production. Refineries are operating near their maximum capacity, yet a combination of seasonal maintenance and changes in crude oil types has constrained distillate output. At the same time, exports of heating oil and diesel have risen as both Europe and parts of Latin America tap into U.S. supplies, following disruptions in refining and shipping activities in Russia and the Middle East. Concurrently, the cost of crude oil feedstocks has increased due to renewed concerns over the flow of Russian crude, sparked by intensified Ukrainian strikes on major energy sites. Additionally, political pressure from Washington to deter European purchases of Russian oil raises the possibility of further sanctions, potentially limiting available seaborne crude.