Heating Oil Jumps Over 7%

US heating oil futures jumped over 7% to above $3.60 per barrel on Monday, recovering most losses after hitting a more than five-week low in the previous session, tracking a rebound in crude oil prices amid renewed Middle East tensions. Over the weekend, President Donald Trump said a US Navy guided-missile destroyer struck and disabled an Iranian-flagged cargo ship in the Gulf of Oman, after which Marines boarded and seized it. The move followed reports that Iran fired on commercial vessels transiting the Strait of Hormuz, as Tehran again shut the chokepoint, saying the US blockade of Iran-linked ships violated a ceasefire set to expire Tuesday. The standoff over the Strait of Hormuz risks worsening the global energy crisis and challenges Trump’s expectation of a swift resolution to the conflict. Elsewhere, forecasts indicate mostly warmer-than-normal temperatures through April 30, which could lessen both heating and cooling demand.

Heating oil futures for delivery at the New York Harbor plunged nearly 15% to the $3.3 per gallon mark on Friday, tracking the decline in crude oil benchmarks after Iranian officials stated that the Strait of Hormuz is open for all commercial vessels. The move backed expectations that crude oil and refined product supply from the key region could increase toward normal levels in the near future after cargoes from the Persian Gulf have been nearly suspended since the start of the conflict in March. Still, US President Trump stated that Iranian tankers will remain blockaded for the upcoming sessions, contingent on a longer-lasting resolution to the conflict. The shortage of feedstock for diesel refiners had lifted heating oil futures past $4.7 per gallon in late March, a premium to the heavily-used biodiesel in Asia.

US heating oil futures held above $3.80 per gallon, keeping most of its recent gains after rebounding from a five-week low of $3.624 on April 14 as EIA data showed a larger-than-expected draw in inventories. Distillate stocks, including diesel and heating oil, fell by 3.1 million barrels to 111.6 million in the week ended April 10, beating expectations for a 2.4 million barrel decline. Looking ahead, forecasts point to mostly warmer-than-normal temperatures through April 30, which should keep both heating and cooling demand subdued. On the geopolitical front, the US has continued its naval blockade of the Strait of Hormuz, although sentiment has been supported by growing optimism over potential Middle East peace talks. Reports suggest the US and Iran are moving closer to a second round of negotiations and a possible extension of the ceasefire. President Donald Trump said talks could resume within days and described the conflict as “close to over.”.