FX.co ★ Heating Oil Rises to 10-Month High

Heating oil futures have climbed to approximately $2.20 per gallon, marking a ten-week high. This increase is attributed to constricting crude supplies, an easing of trade tensions, and strong seasonal demand expectations. U.S. crude inventories dropped significantly by 3.64 million barrels in the week ending June 6th, surpassing the predicted decrease of 2.5 million barrels, highlighting upstream shortages. Positive geopolitical developments have also fueled expectations of increased global oil consumption, particularly after President Trump's announcement of a "deal done" with China and commitments to re-establish the Geneva tariff truce. Concurrently, OPEC+ is preparing to elevate output by 411,000 barrels per day in July. Additionally, forecasts for higher than average June temperatures suggest heightened use of heating oil for residential and commercial purposes, sustaining the market's backwardation. However, this rally is moderated by a 1.25 million barrel rise in distillate inventories, twice what was anticipated, and a substantial increase in heating-oil stocks by 487,000 barrels, marking the largest buildup since January.