FX.co ★ Heating Oil Rebounds

US heating oil futures have climbed back to approximately $2.24 per gallon, following a brief dip from their recent peaks. This movement aligns with stronger feedstock costs as the crude oil markets have steadied after significant volatility earlier in the week. The previous decline was largely attributed to a diminishing geopolitical risk premium when President Trump indicated a temporary de-escalation of tensions with Iran. This development alleviated concerns of immediate military conflicts and potential supply disruptions within the energy sector. Although these concerns have lessened, ongoing uncertainty regarding Middle Eastern stability continues to support the market. On the supply front, data from the Energy Information Administration (EIA) suggest a tightening in short-term supply, with heating oil inventories experiencing a notable weekly decrease, even though overall distillate and crude supplies remain plentiful. However, the potential for price increases is limited by the persistently warmer-than-usual temperatures across the eastern United States. This weather pattern is dampening seasonal demand, thereby restraining price reactions despite higher input costs.