FX.co ★ Heating Oil Tracks Crude Lower

U.S. heating oil futures have declined, moving toward $2.12 per gallon, nearing their lowest point in nearly three years—the previous low being $2.00 on April 8th. This decrease is largely influenced by weakened crude feedstock costs. Kazakhstan's declaration to prioritize national interests over OPEC+ production guidelines has amplified these effects, suggesting an increase in output. Such an increase in supply to crucial consumer markets could drive prices further down, potentially escalating tensions among OPEC+ members who are already grappling with compliance issues, despite the recent unexpected announcement of heightened output rates set for May, which exceeded analysts' projections threefold. However, this downward pressure is somewhat balanced by the U.S. Energy Information Administration's recent report, noting a significant 2.35 million-barrel reduction in U.S. distillate stocks for the week ending April 18—a decline much larger than the anticipated 0.1 million-barrel drop. Meanwhile, heating oil inventories have largely remained stable for a third consecutive week, highlighting sustained demand.