HEATING OIL FUTURES

Heating oil inventories have improved and at this point, it looks like there is adequate supply for winter even with refinery problems from Hurricanes Katrina and Rita. Demand for all distillates over the past four weeks was up 5.2% from a year ago. As of December 23rd, heating oil supplies were up 10% from a year ago. On December 6, 2005, the DOE estimated wholesale heating oil prices to average $1.82 in the fourth quarter of 2005, up from $1.37 a year ago.

Relatively warmer October and November weather across most of the United States has led us to reduce slightly the winter heating expenditures we projected in the November Outlook...

Households heating primarily with heating oil can expect to pay, on average, $255 (21 percent) more this winter than last.

U.S. Department of Energy's Short-term Energy Outlook. December 6, 2005.

Diesel fuel and heating oil are very similar petroleum products, with the major difference being that diesel fuel has less sulfur. Thus, increases in heating oil demand often put increased pressure on diesel fuel prices as well. In addition, diesel fuel is used heavily for the harvesting of crops and thus, demand tends to increase during the fall.

DOE's This Week In Petroleum. November 3, 2004.