FX.co ★ Heating Oil Rises to Over 2-Month High

US heating oil futures have surged to over $2.65 per gallon, reaching late-November highs, driven by an intense winter storm that has significantly elevated heating demands while simultaneously straining supply within the refined products market. The Arctic cold sweeping across substantial areas of the United States has led to a broad increase in energy consumption, exacerbating short-term supply issues amidst already stretched distillate inventories and refinery operations. Support from feedstock costs also played a role, as crude prices approached four-month highs, primarily due to severe weather causing disruptions that affected up to 2 million barrels per day of US crude production and temporarily halted Gulf Coast exports. Additionally, ongoing geopolitical tensions in the Middle East, along with a considerably weaker US dollar, have contributed to upward pressure across the energy sector. However, the upward movement in heating oil prices is beginning to meet resistance, as NOAA forecasts suggest milder temperatures starting from the first week of February, which is likely to reduce anticipated heating demand and limit the longevity of this recent price surge.