FX.co ★ Heating Oil Drops to 1-Week Low

In May, US heating oil futures dipped to approximately $2.12 per gallon, marking their lowest point in over a week. This decline was primarily driven by larger-than-expected domestic stockpiles, overshadowing ongoing geopolitical concerns. According to the latest report from the Energy Information Administration (EIA), crude oil inventories increased by 1.33 million barrels, contrary to analysts' predictions of a 1.85 million-barrel decrease for the week ending May 16th. Additionally, distillate fuel reserves rose by 0.58 million barrels, defying expectations of a 1.2 million-barrel decline. Despite this, supply disruption fears remained, prompted by intelligence reports indicating a possible Israeli strike on Iranian nuclear facilities, potentially triggering Iranian retaliation in the strategic Strait of Hormuz. Simultaneously, the collapse of ceasefire talks between the US and Russia concerning Ukraine has added to the uncertainty surrounding global energy availability.