FX.co ★ Heating Oil Drops to Monthly Low

Heating oil futures have declined to approximately $2.36 per gallon, hitting a monthly low due to a combination of reduced consumption indications and revived trade-war concerns, which have shifted the supply/demand balance towards increased stock levels. In the United States, the Energy Information Administration (EIA) reported an unexpected increase in distillate inventories of nearly 4.2 million barrels in the past week. This suggests that the typical seasonal decline in demand has not yet absorbed the summer's production levels. Meanwhile, President Trump's announcement of a potential 30% tariff on European Union and Mexican goods, in addition to existing tariffs on Canadian energy products, has cast new uncertainties over global economic growth projections, suggesting that fuel consumption might decrease if trade barriers impede industrial activities. Although OPEC has adjusted its demand outlook for the second half of the year upwards, citing economic strength in Brazil, China, and India, Chinese refiners have demonstrated a preference for producing gasoline and diesel over middle distillates, leaving heating oil more vulnerable.