US heating oil futures surged past $2.25 per gallon on Wednesday, rebounding from their early-January decline and achieving a one-month high. This movement was driven by rising crude oil prices amid escalating geopolitical tensions and tighter US crude supply balances. Heightened concerns arose from unrest in Iran and renewed uncertainties regarding Venezuelan oil supply, which collectively bolstered the broader energy market.
From a supply perspective, the latest report from the Energy Information Administration (EIA) indicated a 3.39 million-barrel increase in US crude oil inventories. Distillates saw only a slight reduction of about 29,000 barrels, falling short of expectations. However, heating oil inventories experienced a significant drawdown of approximately 745,000 barrels, marking the most substantial weekly decline in months.
This rebound reflects a constrained short-term supply of heating oil and increased geopolitical risk. Nonetheless, the potential for further price increases is limited due to an abundant overall supply of crude and distillates, coupled with warmer-than-usual temperatures in the eastern US that continue to dampen seasonal demand.
