Heating Oil Futures Hold Above $3.60

US heating oil futures traded above $3.60 per gallon in early June, holding most of their recent losses, as doubts over US–Iran negotiations raised fears of prolonged energy supply disruptions from the Middle East. Reports indicated that Iran had suspended indirect negotiations with Washington over Israel’s operations in Lebanon, contrasting with President Donald Trump’s statement that talks with the US were still ongoing. The differing accounts have kept markets on edge and energy commodities volatile. Distillate exports from the region have been significantly disrupted since the conflict began in March, straining refinery operations and driving heating oil futures to a record $4.60 per gallon that month. Reflecting continued supply tightness, US distillate inventories, including diesel and heating oil, fell by more than 2.0 million barrels in the week ended May 22, larger than expectations for a 1 million-barrel draw.

US heating oil futures rose nearly 4% to above $3.60 per gallon in early June, paring recent losses, amid lingering uncertainty over a potential US–Iran peace deal that could ease supply constraints. The two sides were reportedly proposing adjustments to a draft deal to extend a ceasefire and restore access through the Strait of Hormuz, though meaningful progress remained unclear. Adding to uncertainty, tensions in Lebanon escalated, with Israeli advances and Hezbollah clashes raising spillover risks. Distillate exports from the region have been heavily disrupted since the conflict began in March, straining refinery operations and pushing heating oil futures to a record $4.60 per gallon that month. Reflecting tight supply conditions, US distillate inventories, including diesel and heating oil, fell by 2.107 million barrels in the week ended May 22, larger than the expected 1 million barrel decline.

US heating oil futures traded around $3.50 per gallon, hovering near their lowest level in more than five weeks, on expectations of easing supply constraints after reports indicated that Iran and the US had agreed to a truce. The two sides reportedly reached a 60-day memorandum that would extend the existing ceasefire and support the resumption of crude oil and refined product exports through the Strait of Hormuz within a month. Distillate product exports from the region have been heavily disrupted since the conflict erupted in March, putting pressure on refinery operations and driving heating oil futures to a record high of $4.60 per gallon that month. Reflecting tight supply conditions, US distillate inventories, including diesel and heating oil, fell by 2.107 million barrels in the week ending May 22, a larger-than-expected draw compared with forecasts of a 1 million barrel decline. In May, heating oil futures declined about 14%.