FX.co ★ Heating Oil Tumbles to 1-Moth Low

U.S. heating oil futures have dropped significantly to approximately $2.33 per gallon, marking a one-month low. This decline is primarily due to a noticeable reduction in crude feedstock prices, along with diminishing concerns regarding the actual tightness of the distillate supply. The decrease in crude prices follows intense diplomatic efforts centered on a revised U.S.-supported peace initiative for Ukraine, as well as concurrent U.S.-Russia communications. These developments have increased the likelihood that some wartime export restrictions on Russian oil might be lifted, which would introduce additional crude and refined products to markets that are already leaning towards more abundant supplies. Meanwhile, U.S. distillate inventories unexpectedly rose by around 171,000 barrels in the week leading up to November 14th, alleviating fears of an imminent product shortage and decreasing the immediate need for substantial restocking. Additionally, while weather conditions offer some support, forecasts from NOAA suggest only isolated areas of below-normal temperatures in parts of the U.S. extending into early December. However, the cold is unevenly distributed and insufficient to counteract the supply-driven decline.