Heating Oil Remains Volatile

US heating oil futures traded around $4.20 per gallon, remaining highly volatile as markets continued to monitor the ongoing Middle East crisis. Prices have fluctuated throughout the month but are still up more than 45% so far, on track for its largest monthly gain on record, as the near-complete closure of the Strait of Hormuz has severely disrupted energy flows. In the latest development, markets digested Washington’s delayed action on Iran’s energy sector. President Donald Trump said Iran had requested seven days, but he granted 10, pushing the deadline to April 6. Analysts noted that while the extended ceasefire eases some near-term pressure, the geopolitical premium is unlikely to fade, as around 8 million barrels per day remain offline and Persian Gulf flows are still at risk. Meanwhile, EIA data showed distillate inventories, including diesel and heating oil, rose by 3.0 million barrels last week, far exceeding expectations of a 1.3 million-barrel draw.

US heating oil futures rose above $4 per gallon on Thursday, partially recovering losses from the previous session, as investors weighed conflicting signals from the US and Iran over a potential end to the conflict. Tehran stated it has no intention of engaging in direct talks with Washington, emphasizing that mediated discussions do not constitute formal negotiations. By contrast, the White House maintains that peace talks are ongoing, while cautioning that military action could be intensified if Iran does not acknowledge its losses. Meanwhile, distillate inventories, including diesel and heating oil, rose by 3.0 million barrels in the week ending March 20, far exceeding analysts’ expectations of a 1.3 million-barrel draw and sharply reversing the prior week’s decline. Energy markets have been volatile since the start of the war, with heating oil prices up more than 50% this month due to supply disruptions in the Strait of Hormuz.

US heating oil futures dropped toward $3.95 per gallon on Wednesday as diplomatic efforts to resolve the Middle East conflict combined with a surprise build in domestic inventories to pressure energy markets. Distillate stocks including diesel and heating oil rose by 3.03 million barrels in the week ended March 20th defying analyst expectations for a 1.3 million-barrel draw and marking a sharp reversal from the previous week's decline. This inventory surge occurred alongside a 6.9 million-barrel increase in US crude stockpiles which surpassed forecasts and signaled a fifth consecutive weekly build. While the US reportedly delivered a 15-point peace proposal to Iran via Pakistan Tehran ruled out ceasefire talks despite allowing restricted transit through the Strait of Hormuz. Although energy markets remain volatile due to fuel hoarding in Asia the pullback in benchmark crude has provided a temporary ceiling for heating oil prices which remain up 50% for the month.