US Heating Oil Surpasses $5

US heating oil prices climbed above $5.0 per gallon, their highest level on record, amid persistent tight distillate supplies. EIA data showed that US distillate stockpiles, which include diesel and heating oil, rose by 2.1 million barrels in the week ended September 4, but remained 13% below the five-year average, indicating that inventories remain low. US refineries also operated at 97.8% of capacity during the week, leaving limited room to further increase distillate production. The supply squeeze comes as global supply risks intensify on multiple fronts, with Houthi attacks targeting Saudi energy infrastructure, prolonged disruptions in the Strait of Hormuz, and Ukrainian attacks on Russian refineries further constraining diesel supplies amid Russia’s export curbs. Meanwhile, seasonal agricultural activity and the approaching winter heating season could further boost distillate demand, putting additional pressure on already-tight supplies.

US heating oil prices held around $4.76 per gallon, near a record high as refineries grappled with increasingly constrained refined-product supplies. The Middle East war continued to escalate as Iranian-backed Houthis launched strikes on Saudi energy facilities, including the Jazan oil refinery. This comes on top of ongoing disruptions and reduced traffic through the Strait of Hormuz, while Ukrainian attacks on Russian refineries are further limiting global diesel supplies, adding to the impact of Moscow’s existing export restrictions. Meanwhile, demand could increase as seasonal agricultural activity picks up, while the approaching winter heating season could add to pressure on distillate supplies. US refineries were already operating at 98% of capacity in the week ended August 28, leaving limited room to further increase distillate production. EIA data also showed that US distillate fuel stocks were 14% below the five-year average in late August.

US heating oil prices rose above $4.60 per gallon, close to a record high and about 100% higher than a year earlier amid concerns over increasingly tight supplies. EIA data showed that distillate fuel stocks rose by 796 thousand barrels in the week ended August 28 but remained 14% below the five-year average for this time of year. This comes as demand is expected to rise as agricultural states enter their harvest and planting seasons, while the approaching winter heating season could put further pressure on distillate supplies. Reflecting the market's tightness, average US diesel prices have reached a record high. The market has remained constrained by escalating tensions in the Middle East, as the US and Iran continued to exchange fire, while ongoing disruptions to Russian refining capacity and an extended Russian diesel export ban further limited global distillate supplies.