FX.co ★ Heating Oil Surges Amid to 14-Month High

Heating oil futures have climbed to over $2.65 per gallon, reaching their highest point since April 2024. This surge is attributed to a constriction in distillate supplies, increasing costs of crude oil feedstock, and rising geopolitical tensions. Ultra-low-sulfur diesel futures, which are closely linked to distillate fuel availability, have also experienced a significant increase due to concerns that tensions in the Middle East could disrupt crude transportation through the Strait of Hormuz and reduce distillate exports from Gulf Arab regions. This situation has strained the balance of feedstock for both diesel and heating oil. Concurrently, U.S. crude oil inventories declined by 11.5 million barrels up to June 13th, marking the largest decrease in a year, as refineries operated near full capacity to meet the high demand for diesel, marine fuel, and summer fuel blends, leaving limited spare stock. Additionally, increased war-risk surcharges on tanker freight and insurance have raised the cost of delivered products, while the potential for escalations has encouraged speculative purchasing, all contributing to the sharp rise in heating oil prices.