Heating Oil Tumbles 17%

US heating oil prices traded around $4.60 a gallon, near a three-week low as expectations of stronger fuel supply eased market concerns. Europe plans to release 42 million barrels from strategic reserves over three months, half of which will be diesel, while additional Chinese fuel-export quotas and higher production elsewhere are expected to improve availability. Reports of an agreement to increase Russian diesel supplies to the US and global markets could also ease tightness, following temporary US Treasury authorization for certain transactions involving Russian diesel. However, US distillate inventories fell by 1.5 million barrels in the week ended October 23, leaving stocks 10% below their five-year seasonal average and highlighting persistent domestic supply constraints. Prices also faced pressure as diplomatic contacts between Washington and Tehran reduced some fears of renewed US military strikes on Iran and further disruptions to Middle Eastern energy flows.

Heating oil prices in the US resumed their decline to around $4.70 per gallon amid expectations of increased Russian diesel supplies. US Energy Secretary Chris Wright said Washington could allow additional Russian diesel shipments under a temporary sanctions waiver. Russian refineries also increased crude processing by around 25% in the second half of October compared with the beginning of the month, while diesel output rose to an estimated 225,000 metric tons per day. Meanwhile, the US plans to exchange up to 315,000 barrels from its Northeast Home Heating Oil Reserve. However, supply risks remained elevated after Yemen's Iran-aligned Houthis claimed to have struck Saudi Arabia's Ras Tanura refinery, while concerns over possible renewed US military action against Iran persisted. US distillate inventories fell by 1.5 million barrels in the week ended October 23, leaving them 10% below their five-year seasonal average.

Heating oil prices in the US traded above $4.90 per gallon, not far from their record high of around $5.20 reached in mid-September, as concerns over tight distillate supplies persisted despite plans to release emergency fuel stocks. The US Energy Department announced it would loan 315,000 barrels from the 1 million-barrel Northeast Home Heating Oil Reserve, with bids due October 27 and deliveries expected to be completed by November 13. The temporary release aims to ease heating costs ahead of winter, although its impact may be limited, as borrowers must return the fuel plus a premium. Separately, analysts warned that President Trump's deal with Russia to supply diesel to US and global markets is unlikely to significantly ease price pressures, as the promised volumes are too small to alleviate the global supply squeeze. Meanwhile, EIA data showed US distillate inventories rose by 1.7 million barrels in the week ended October 16, but remained around 9% below their five-year average.