FX.co ★ Heating Oil Rises After EIA

Heating oil futures approached $2.30 per gallon, recovering from their sharp decline on August 26th, as tighter crude and distillate balances underscored robust refining demand. U.S. crude oil inventories saw a notable drop of nearly 974 thousand barrels for the week ending August 22nd. In parallel, distillate stocks unexpectedly decreased by roughly 1.49 million barrels, countering predictions of a 1.1 million-barrel increase and leaving supplies thinner than expected. Elevated refinery operations continue to meet the high demand for refined products, thereby limiting opportunities to replenish inventories and rendering any shortage immediately responsive in terms of pricing. Concurrently, geopolitical tensions and trade interruptions have disrupted crude supplies and altered trade routes. Ukrainian attacks on Russian energy infrastructure, combined with new U.S. tariffs affecting Indian crude imports, have collectively driven up premiums on immediate distillate deliveries.