US Heating Oil Retreats

US heating oil futures dropped about 5% to $3.42 per gallon, retreating from a three-year high, after President Donald Trump signaled near-term plans to curb surging energy prices. Potential measures include tapping US strategic petroleum reserves, easing fuel-blending rules, and allowing the Treasury to trade oil futures. Despite the drop, heating oil is still heading for a more than 30% weekly jump, the largest since early 2022, as Middle East tensions nearly halted shipments through the Strait of Hormuz. The US-Israeli conflict with Iran showed no signs of abating and has now entered its seventh day, with Iran striking a Bahrain oil refinery with missiles and drones. Israel also hit Tehran with airstrikes, and the US suspended operations at its Kuwait embassy. Despite a 70% decline in tanker traffic through the strait, EIA data showed distillate inventories rose 0.4 million barrels, defying a projected 2.6 million-barrel draw.

US heating oil futures climbed more than 8% to above $3.55 per gallon, reaching their highest level since January 2023, driven by concerns over prolonged supply disruptions from the Middle East conflict. Analysts cited a potential month-long US campaign, Tehran’s efforts to broaden the confrontation, and the effective shutdown of the crucial Strait of Hormuz. To help contain broader energy shocks, President Donald Trump proposed risk insurance and naval escorts for commercial vessels in the Gulf, while Treasury Secretary Scott Bessent outlined additional measures to stabilize energy markets. Despite tanker traffic through the Strait plunging 70%, EIA data showed an unexpected 0.4 million-barrel rise in distillate inventories last week, defying forecasts of a 2.6 million-barrel draw. US crude stocks also jumped 3.5 million barrels to 439.3 million, well above expectations, providing a key buffer against potential energy supply shocks.

US heating oil futures eased to $3.23 per gallon, holding near September 2023 highs after massive domestic inventory builds partially offset geopolitical disruptions. Data from the EIA revealed a surprise 0.4 million-barrel increase in distillate stocks for the week ended February 27th, defying expectations of a 2.6 million-barrel draw. This surplus developed despite a 70% collapse in tanker traffic through the Strait of Hormuz following the start of Operation "Epic Fury." While the IRGC claims full control of the strategic waterway and has threatened to "set ablaze" any transiting vessels, the market’s immediate supply fears have been tempered by President Trump’s instruction for the DFC to provide political risk insurance for tankers. Furthermore, US crude inventories surged by 3.5 million barrels to 439.3 million, significantly exceeding forecasts and providing a substantial buffer against the risk of a broader energy shock.