Heating oil prices
In its Weekly Petroleum Status Report released on November 12, 2015, the EIA (U.S. Energy Information Administration) stated that heating oil prices are $2.42 per gallon for the week ended November 9, 2015. Heating oil prices have been almost flat throughout the last month.
East Coast residential heating oil prices rose slightly by $0.01 per gallon, settling at $2.43 per gallon on November 9, 2015. Midwest heating oil prices fell by $0.04 per gallon, settling at $2.24 per gallon on November 9, 2015.
In the same report, the EIA stated that on-highway diesel fuel prices are $2.50 per gallon for the week ended November 9, 2015. This shows that on-highway fuel prices rose by $0.02 per gallon compared to the previous week ended on November 2, 2015.
Why diesel and heating oil prices are low
Distillate inventory levels are growing at a rapid pace, but demand is less than anticipated. Low distillate prices, mainly because of less heating degree days, increased distillate production in Saudi Arabia and increased stockpiles in Europe and Asia, which together crushed distillate prices. A high crack spread and low crude oil prices are the only favoring factors for refiners.
Impact of low heating oil and diesel prices
Lower heating oil and diesel prices are bearish for refineries, with a negative impact on revenues of refiners such as HollyFrontier (HFC), Chevron (CVX), Tesoro (TSO), Valero Energy (VLO), Marathon Petroleum (MPC), and Western Refining (WNR).
Some of these companies are components of ETFs such as the iShares US Energy ETF (IYE), the Energy Select Sector SPDR ETF (XLE), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and the Vanguard Energy ETF (VDE).