US heating oil futures edged up toward $2.44 per gallon after a volatile period, as a tight distillate market and higher crude feedstock costs outweighed softening near-term demand driven by milder weather and cheaper natural gas. The latest EIA data showed an estimated 5.6 million-barrel draw in distillate inventories, underscoring that available supplies remain relatively constrained for this point in the season. At the same time, crude oil feedstock costs have risen amid renewed tensions between the US and Iran. Elevated refinery runs have helped keep product flows stable, but the market remains highly sensitive to any shifts in inventory levels.
On the demand side, forecasts for milder temperatures across key US heating regions are curbing expected heating fuel consumption, while weaker natural gas prices and increased drilling activity are encouraging substitution away from fuel oil. Additionally, reports of a sharp build in crude stocks and signals from both OPEC and the IEA that global supply may exceed demand later this year are capping further upside for prices.
