FX.co ★ Heating Oil Drops to Multi-Month Lows

U.S. heating oil futures have fallen below $2.10 per gallon as of April, marking the lowest point since September due to a significant drop in crude oil feedstock prices. This decline is primarily attributed to the anticipation of a strong supply coupled with weak demand. Recently, OPEC+ surprised the market by increasing production by 411,000 barrels per day, which significantly surpassed their planned increments. Furthermore, U.S. crude oil inventories saw an unexpected surge of 6.2 million barrels, despite forecasts predicting a 2-million-barrel reduction. This increase highlights the ample supply available. Although oil, gas, and refined products are not currently affected by the recent tariffs imposed by the U.S., prolonged trade tensions—which are heightened by China's proposed 34% tariff on U.S. goods effective April 10th—continue to impact global markets and could potentially suppress energy demand overall. Additionally, with milder temperatures prevailing seasonally, there is a decrease in the consumption of heating oil across both residential and commercial sectors. The most recent report from the U.S. Energy Information Administration (EIA) indicated an increase in distillate stockpiles by 264,000 barrels last week, defying predictions of a 1.1-million-barrel decrease.