Heating Oil Hits 3-Month Low

Heating oil futures in the US were at $3.97 per gallon, easing from the two-month high of $4.02 on July 14th as stronger inventory data momentarily offset a tightening supply backdrop. Data from the EIA indicated that distillate fuel stocks rose by 4.6 million barrels on the week ending July 19th, nearly erasing the draw from the earlier week. The build weighed against a decreasing SPR as more strikes between the US and Iran continued to hamper global supply of crude oil and refined fuels. On top of that, major diesel producer Russia halted exports of the fuel and shifted to an importer, as higher crude prices exacerbated the series of Ukrainian strikes on the country's largest refineries. This magnified the impact of refinery bottlenecks in the US and direct damage for facilities in the Middle East. Consequently, diesel crack spreads rose to a record high in July.

US heating oil prices held around $4.0 per gallon, near the highest level since May 21, driven by intensifying concerns over fuel supplies. US forces launched fresh strikes on Iranian targets and resumed a naval blockade of Iranian shipping through the Strait of Hormuz. President Donald Trump warned of further attacks unless Tehran returns to negotiations but also backed away from a proposed 20% charge on shipments through the strait. Adding to supply concerns, disruptions to Russian energy infrastructure following continued Ukrainian strikes prompted Russia to consider suspending diesel exports, as refinery outages and higher crude costs weighed on domestic fuel availability. Meanwhile, Kazakhstan’s Caspian Pipeline Consortium cut June shipments by 7% due to maintenance at the Tengiz oilfield and weaker Russian flows. At the same time, warmer-than-normal temperatures expected through July 28 are likely to sustain elevated fuel demand from the power sector.

Heating oil in the US climbed toward $3.90 per gallon, the highest since late May, as concerns over fuel supplies increased. President Donald Trump said the US would reinstate a naval blockade on Iran and impose a 20% reimbursement fee on cargo passing through the Strait of Hormuz, raising fears over disruptions to regional energy flows. Supply concerns were also heightened by disruptions to Russian energy exports, with Ukraine reporting strikes on an oil depot in Stavropol and storage facilities at the port of Kavkaz. Russia said it would suspend diesel exports and become a net importer as repeated Ukrainian attacks and higher crude prices disrupted operations at key refineries. Meanwhile, Kazakhstan’s Caspian Pipeline Consortium reduced shipments by 7% in June due to maintenance at the Tengiz oilfield and lower Russian flows. At the same time, warmer-than-normal weather forecasts through July 28 are also expected to keep power sector fuel demand elevated.