Heating Oil Trading

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Heating oil is produced from the refining of crude oil. The refining of crude yields 50% gasoline and 25% heating oil. This product of crude oil is also called distillate or Number 2 oil. In Europe, heating oil is called gas oil.

Heating oil is used primarily to heat homes in Northeast America. The US produces roughly 85% of its heating oil and imports the rest from Canada, Venezuela and the Virgin Islands. The production of heating oil generally increases in winter to ensure sufficient supply of oil to meet the seasonal demand.

Heating Oil Futures: How Weather Impacts Price

Traders dealing in heating oil futures should consider checking weather reports regularly. The importance of weather reports increases substantially during the winter months (from December to February). The focus should be on Northeast USA, as this region accounts for 80% of America’s heating oil consumption.

rading Heating Oil Futures Tips

Heating oil prices typically move in sync with that of crude oil

  • Most profit-making opportunities arise during the winter months. Prolonged periods of extreme cold or an unanticipated cold wave in Northeast USA can cause a rally in the price of heating oil futures
  • Buying heating oil futures in winter does not assure success in futures trade. Profit-making opportunities arise only when the weather is colder than anticipated. This results in the higher-than-expected consumption of heating oil during the season, boosting demand.

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