Heating Oil Extends Losses

Heating oil futures for delivery at New York Harbor extended its losses to around $3.70 per gallon, remaining close to a two-week low, as markets gauged the likelihood of the US and Iran reaching a deal. The US military reportedly carried out a self-defense strike in Iran, underscoring the fragility of diplomatic efforts, following President Donald Trump’s remarks that talks with Tehran were progressing, with negotiations including a US lifting of its blockade and Iran reopening the Strait of Hormuz. Exports of distillate products from the region have been largely halted since the war began in March, straining refinery operations and pushing heating oil futures to a record high of $4.60 that month. Meanwhile, US distillate stocks unexpectedly rose in mid-May, contrasting with a decline in gasoline inventories, suggesting refiners prioritized diesel and jet fuel production amid global transportation fuel shortages.

Heating oil futures for delivery at New York Harbor fell to around $3.70 per gallon, hitting a two-week low, as optimism over a US–Iran deal raised expectations of a gradual normalization in Middle East energy exports. President Donald Trump said discussions were moving forward in a constructive manner and noted that reopening of the Strait of Hormuz had been largely negotiated and could be announced soon. However, uncertainty remains as reports indicated the US military carried out a self-defense strike in Iran. Exports of distillate products from the region have been largely halted since the war began in March, straining refinery operations and pushing heating oil futures to a record high of $4.60 that month. Meanwhile, US distillate stocks unexpectedly rose in mid-May, contrasting with a decline in gasoline inventories, suggesting refiners prioritized diesel and jet fuel production amid global transportation fuel shortages.

Heating oil futures for delivery at the New York Harbor held below $4.0 per gallon, down from the seven-week high of $4.16 touched May 19th, as markets assessed the outlook on domestic refining activity and Middle Eastern petrol supply. Data from the EIA showed that stocks of distillate fuel in the US inched higher by 372 thousand barrels in the first week of May, contrasting with bets of a 1.1 million draw. The data also contrasted with a 1.5 million barrel draw for gasoline, indicating that refineries opted to concentrate capacity in diesel and jet fuel due to the shortages in global transportation hubs. The overall supply backdrop remained tight as the standstill between the US and Iran prolonged expectations of the suspension in energy exports from the Middle East. The export of distilled products from the region has been all but halted since the start of the war in March, stressing refineries and driving the price of heating oil futures to a record high of $4.6 in March.