FX.co ★ Heating Oil Resumes Downturn

U.S. heating oil futures have dropped to below $2.30 per gallon, marking a seven-week low. This decline is attributed to forecasts of milder weather, a reduction in crude oil feedstock costs, and a less acute shortage of distillates. Concurrently, natural gas prices have fallen sharply due to predictions of warmer weather over the upcoming fortnight, decreasing the demand for heating and, accordingly, lessening the incentive to switch to distillate fuels. Crude oil inputs have also become less expensive, as evidenced by a modest increase in U.S. commercial crude oil inventories by approximately 0.57 million barrels, which has contributed to reducing refinery feedstock expenses. The balance in distillate supplies has also improved, with the latest report from the Energy Information Administration (EIA) indicating a 2.06 million-barrel rise in U.S. distillate inventories. This was significantly above expectations and represents the third consecutive week of inventory builds. This trend continues to restrict any immediate increase in heating oil prices, although traders remain vigilant, monitoring geopolitical developments that could still impact maritime supply routes.