Heating Oil Rises After Export Ban Denial

US heating oil futures rose above $4.80 per gallon, partially recovering their losses from the previous session, after the White House denied reports that the US was preparing a 90-day diesel export ban. Energy Secretary Chris Wright also said the administration was instead working with refiners to increase US diesel supplies through voluntary measures that would not reduce refining throughput, although he provided no details and said no decisions had been made. Meanwhile, EIA data showed US distillate inventories fell by 400,000 barrels in the week ended September 18, while production declined to an average of 5.2 million barrels per day. Inventories are now about 12% below the five-year average, pointing to tight supplies. Heating oil prices have surged to record highs this month as disruptions to crude oil supplies from the Middle East and strikes on Russian refineries have tightened global fuel availability.

US heating oil futures sank below $4.80 per gallon after reports that the Trump administration could impose a 90-day ban on diesel exports. The proposal faces divisions within the administration and the oil industry as market fundamentals clash against high diesel prices ahead of mid-term elections. The US exports around 20% of global diesel, flooding the domestic market with fuel in the short term should the ban pass. Still, should stocks of distillate fuel be refilled, the ban would cut refining capacity at a time that crack spreads continue to extend record highs. Distillate fuel prices had surged to record highs this month as low crude oil supplies from the Middle East and strikes on Russian refineries dampened global availability of fuel. The potential for an export ban from the US were combined with President Trump attempting to orchestrate an energy infrastructure ceasefire between Russia and Ukraine.

US heating oil prices fell to around $4.80 per gallon, retreating further from last week’s record high above $5.20, after reports that the Trump administration is preparing a plan to ban diesel exports for 90 days. The proposal faces divisions within the administration and the oil industry as Washington seeks to bring down energy prices. Meanwhile, Ukrainian President Volodymyr Zelenskyy called on President Trump to organize a trilateral meeting with Russian President Vladimir Putin, saying the leaders need to move “as quickly as possible” to end the war. Zelenskyy also said he and Trump discussed an energy ceasefire. Trump said Moscow has “unfortunately lost control” of its diesel industry due to the war and has previously urged Zelenskyy to stop targeting Russian oil refineries with drone strikes. Meanwhile, Saudi Arabia’s partial restoration of its East-West pipeline is helping ease some supply concerns despite uncertainty over Middle East peace prospects.