US Heating Oil Prices Drop to Six-Month Low Amid Supply Glut

US heating oil futures have dropped below $2.15 per gallon, marking a six-month low, as markets price in a worsening global oil supply surplus and decreased risks related to Russian supplies, according to market data.

The primary pressure stemmed from increased production, as OPEC+ countries continued to pump previously halted volumes, while producers outside the organization - particularly in the Americas - have ramped up output. Additionally, expectations of progress towards ending the war in Ukraine have eased concerns over Russian supply, reducing the risk premium in the oil derivatives market.

On the inventory side, US data showed a rise in distillate stockpiles by 2.502 million barrels for the week ending December 5, following an increase of 2.059 million barrels the previous week, exceeding market expectations of 1.9 million barrels, which further intensified downward pressure on prices.

On the demand side, signs of economic slowdown in China have added further uncertainty to consumption outlooks, compounding the factors pressuring heating oil prices in recent sessions.