New York, Feb 5, 2026, 07:09 EST — Premarket
- March heating oil (NY Harbor ULSD) futures dropped 1.3% in early trading as crude prices slipped amid reduced concerns over Middle East supply.
- U.S. distillate inventories saw a sharp weekly drop, supporting prices for the time being.
- Friday’s U.S.-Iran talks in Oman and next week’s U.S. inventory data have traders focused.
March heating oil futures dropped 3.2 cents, or 1.3%, closing at $2.4380 a gallon after a previous settle of $2.47. The contract traded between $2.4015 and $2.4454 during the session, per the NYFH6 contract page. (Investing)
The drop matters beyond just the screens. Heating oil serves as a benchmark for distillate fuels, which covers diesel and home heating fuel, meaning it can swiftly impact transport expenses and winter heating bills.
The contract has turned into a fast barometer for geopolitics. Distillate prices usually follow crude when traders factor in—or remove—supply risks linked to the Middle East.
Crude prices slipped after the U.S. and Iran agreed to talks in Oman scheduled for Friday, easing immediate concerns over supply disruptions. Brent dipped over 1%, while U.S. crude fell about 1.3% during the session tracked by Reuters. UBS analyst Giovanni Staunovo noted that the market’s attention was locked on the Oman meeting. Meanwhile, PVM’s John Evans cautioned that “one untoward remark” could push Brent back toward $70 a barrel. (Reuters)
Oil followed up on a sharp gain from the previous day. Prices jumped around 3% Wednesday after reports hinted the Friday talks might fall apart. Ajay Parmar, director at ICIS, warned a “hot war” could threaten Iran’s 3.4 million barrels per day output. At the same time, Phil Flynn of Price Futures Group pointed to the sharp divergence between large API inventory estimates and smaller official draws as fueling volatile trading. (Reuters)
The physical market told a different story. U.S. distillate inventories dropped by 5.6 million barrels last week, sitting roughly 2% below the five-year average. Crude stocks also declined, down 3.5 million barrels to 420.3 million barrels, according to U.S. government data. (EIA)
EIA data showed U.S. distillate inventories dropped to 127.368 million barrels for the week ending Jan. 30, down from 132.921 million the prior week. The next report will be released on Feb. 11. (U.S. Energy Information Administration)
The tug-of-war — weaker crude due to diplomatic moves, firmer distillates driven by data — should keep heating oil on edge around news and weather shifts. A warm snap late in the U.S. Northeast winter could quickly slash demand. At the same time, higher refinery runs would boost inventories, easing some pressure on distillates.
All eyes are on Friday’s Oman talks for the next market move. The U.S. inventory report due next Wednesday will then show if the distillate drawdown is holding steady.
