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Heating Oil and Diesel Fuel Prices Rose for 4th Straight Week

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Apr. 1 2016, Updated 1:06 p.m. ET

Heating oil prices 

The EIA (U.S. Energy Information Administration) reported that US residential heating oil prices rose marginally by 0.5% to $2.13 per gallon on March 21 compared to the previous week. The US residential heating oil prices are almost 29% less than the prices for the same period in 2015. Prices fell due to milder-than-normal winter weather in 2015–2016 compared to 2014–2015. This led to lower heating demand.

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Diesel fuel prices

On March 23, 2016, the EIA reported that US on-highway diesel fuel prices increased by 1% to $2.1 per gallon on March 21 compared to the previous week. Diesel fuel prices are 25% less than the prices for the same period in 2015. A milder than normal winter in 2015–2016 led to the fall in diesel fuel prices. A mild winter curbs the heating demand during the heating season. Distillate consists of diesel fuel and heating oil. Distillate stocks are the key drivers of heating oil and diesel fuel prices. Read the next part of the series to learn more about distillate stocks.

Heating oil and diesel fuel price forecast for 2016

Diesel fuel prices will average around $2.12 per gallon and $2.32 per gallon in 2016 and 2017, respectively, as per the EIA. Heating oil prices could average around $1.98 per gallon in 2016 and $2.17 per gallon in 2017, respectively. Heating oil and diesel fuel prices rose for the fourth straight week as of March 21, 2016. High gasoline, heating oil, and distillate prices benefit US refiners like Tesoro (TSO) and Valero Energy (VLO). Likewise, high crude oil prices positively impact the margins of oil and gas producers like Ultra Petroleum (UPL), Swift Energy (SFY), Denbury Resources (DNR), and WPX Energy (WPX).

Impact on ETFs

The roller coaster ride in crude oil prices affects ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the ProShares Ultra Oil & Gas (DIG), and the VelocityShares 3x Long Crude Oil ETN (UWTI).

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