New York, Jan 27, 2026, 07:05 EST — Premarket
- NY Harbor ULSD (heating oil) March futures slipped 0.9%, settling at $2.3283 per gallon
- Winter storm disruptions continue to unsettle distillate trading, despite crude prices strengthening
- Traders eye outage updates alongside Wednesday’s U.S. inventory report
Heating oil futures eased in early Tuesday trading, retreating from gains driven by recent cold weather. NY Harbor ULSD futures for March dropped 2.06 cents, or 0.9%, settling at $2.3283 a gallon. 1
This move is significant since ULSD (ultra-low sulfur diesel) serves as the U.S. benchmark for distillate fuel — setting prices for much of the home-heating sector and a big portion of diesel. When harsh cold snaps squeeze demand and supply simultaneously, the contract can jump sharply, pushing retail heating costs higher as well.
Oil prices inched up as a winter storm disrupted U.S. production and threw refinery operations into disarray. Yet, gains remained limited amid signs that supply is bouncing back, with Kazakhstan and the Caspian Pipeline Consortium’s Black Sea terminal reportedly back to full loading capacity. According to PVM’s Tamas Varga, some traders appear to be locking in profits after heating oil “rose sharply in recent days” due to the cold snap. Daniel Hynes from ANZ highlighted refinery troubles as a new supply concern. 2
U.S. crude output dropped by as much as 2 million barrels per day over the weekend, with the Permian Basin suffering the largest losses, according to consultancy Energy Aspects. On the refining side, Exxon Mobil paused units at its Baytown, Texas, facility, while Cenovus Energy’s Lima, Ohio, refinery faced mechanical problems that may delay a full restart, the report noted. 3
By Monday, shut-ins were already easing, with full production expected back by Jan. 30, according to Energy Aspects estimates. That timeline leaves crude—and its products—without a clear catalyst. “All in all, crude remains in a holding type trade pattern” until Washington’s approach to Iran becomes clearer, said Dennis Kissler, senior vice president of trading at BOK Financial. 4
Heating oil tends to follow crude prices, but traders are zeroed in on the distillate squeeze—the tug-of-war between refinery output and winter demand. If refineries hit a snag, ULSD can break away fast, sending the curve into a rapid squeeze.
Bulls face the risk that the storm narrative loses steam quickly. Should refinery restarts hold and logistics improve, the distillate shortage could ease, pushing the contract steadily lower throughout the U.S. day session.
The upside risk remains a threat to the tape. If the freeze drags on, causing more supply shocks—or if a new disruption hits the headlines—it could push ULSD prices back up just as fast as they tumbled.
Traders are focused on outage notices and Gulf Coast restart schedules, while keeping an eye on whether New York Harbor’s physical prices drop alongside futures. Any sudden move in crude could quickly ripple through to heating oil.
Wednesday, Jan. 28, brings the next crucial update: the U.S. Energy Information Administration’s Weekly Petroleum Status Report, out after 10:30 a.m. It will reveal how distillate inventories fared during the recent cold snap. 5
