FX.co ★ US Heating Oil Futures Retreat Slightly

U.S. heating oil futures have declined to approximately $2.27 per gallon, edging closer to the 11-week low of $2.24 recorded on October 3. This downward trend is largely attributed to diminishing geopolitical tensions, following the announcement of a U.S.-mediated ceasefire and prisoner exchange deal between Israel and Hamas. This agreement signifies the initial step in a broader initiative to conclude the conflict in Gaza. Concurrently, OPEC+ has revealed a moderate increase in output for November, amounting to an additional 137,000 barrels per day—less than anticipated but nevertheless contributing to a burgeoning surplus. Mitigating some of these losses, the U.S. Energy Information Administration's latest projections suggest that U.S. distillate inventories will remain below average until 2026. This is influenced by robust export activity, refinery shutdowns, and considerable stock drawdowns earlier this year; inventories experienced a 17% decline or roughly 22 million barrels in the first half of 2025. The demand for distillate fuel oil increased by 5%, as production of renewable diesel and biodiesel fell by 35% compared to the previous year. Looking forward, further refinery closures in Houston and California are expected to sustain a tight supply scenario well into 2026.