New York, Jan 30, 2026, 07:02 EST — Premarket
U.S. heating oil prices slipped in overnight trading on Friday, retreating after crude oil briefly factored in heightened tensions with Iran. NYMEX March NY Harbor ULSD futures — still commonly called heating oil — last traded at $2.4566 a gallon, down 2.72 cents, or 1.1%, according to CME data at 2:11 a.m. ET. 1
This shift is crucial since ULSD serves as the primary benchmark for U.S. diesel and, during winter, a key indicator for home-heating fuel prices. The market has swung back and forth, torn between supply worries driven by geopolitical tensions and the straightforward issue of whether refiners can meet distillate demand once temperatures drop.
This week’s government data revealed weaker fundamentals than traders had anticipated. Distillate fuel stocks, which cover diesel and heating oil, increased by 0.3 million barrels for the week ending Jan. 23, according to the U.S. Energy Information Administration. Inventories now sit roughly 1% above the five-year average. At the same time, distillate production dropped sharply by 268,000 barrels per day, down to 4.8 million bpd.
Crude prices retreated on Friday following earlier gains this week. Brent dropped 68 cents to $70.03 a barrel by 0958 GMT, while U.S. WTI slipped 72 cents to $64.70. The move came after President Donald Trump indicated a willingness to engage in talks with Iran over its nuclear program, easing fears of an imminent supply disruption. “President Trump’s willingness to give diplomacy a chance regarding Iran seemingly makes a U.S. military intervention less likely than yesterday,” said PVM Oil Associate analyst Tamas Varga. 2
After soaring on Thursday, oil prices pulled back slightly. The previous jump took Brent to a five-month peak, driven by fears that a U.S. strike on Iran could disrupt global supply chains. Brent closed 3.4% higher at $70.71, while WTI advanced 3.5% to $65.42. John Evans, an analyst at PVM, pointed to concerns over potential “collateral damage” from Iran’s retaliation, such as a shutdown of the Strait of Hormuz. 3
Supply disruptions closer to home also played a role. Consultancy Energy Aspects estimated about 500,000 barrels per day of U.S. crude production remained offline Thursday following a winter storm and Arctic blast. Meanwhile, Gulf Coast refineries reported weather-related troubles, according to Reuters. Valero COO Gary Simmons said wholesale liftings dropped to “about 40%” of the prior weekend’s volume as the storm struck but have been slowly bouncing back. 4
Looking beyond daily fluctuations, some analysts expect crude supply to outstrip demand through this year, which could limit gains in refined products if weather patterns normalize. A Reuters poll released Friday forecasts Brent crude averaging around $62 a barrel in 2026, with estimates pointing to a market surplus between 0.75 million and 3.5 million barrels per day. Norbert Ruecker of Julius Baer described the situation as “the oil market appears to be in a lasting surplus.” 5
Still, the drop in heating oil prices might not hold. A new flare-up in Middle East tensions or another harsh U.S. cold snap could quickly tighten distillate supplies. On the other hand, a steadier rebound in refinery output and continued inventory gains could push prices back up.
Traders are now turning their attention to the EIA’s upcoming weekly petroleum status report, set for Feb. 4. It will provide fresh data on distillate inventories, refinery operations, and product supplied—the agency’s key measure of demand. 6
