December NY Harbor ULSD futures fell 3.3% and settled at $1.46 per gallon on November 2, 2016. Diesel futures fell despite the decline in distillate inventories.
Bearish momentum in crude oil prices pressured diesel futures on November 2, 2016. For more information on crude oil prices, read Part 1 of this series.
US on-highway diesel and residential heating oil prices
The EIA (U.S. Energy Information Administration) reported that US on-highway diesel fuel prices rose 0.1% to $2.48 per gallon for the week ending October 31, 2016—compared to the previous week. US residential heating oil prices rose 0.2% to $2.39 per gallon for the same period.
Heating oil and diesel fuel price forecasts
The EIA reported that heating oil prices could average $2.12 per gallon in 2016 and $2.60 per gallon in 2017. Heating oil prices averaged $2.65 per gallon in 2015. On-highway diesel fuel prices will likely average $2.31 per gallon in 2016 and $2.69 per gallon in 2017. Diesel fuel prices averaged $2.71 per gallon in 2015.
US distillate inventories drive heating oil and diesel fuel prices. Distillates consist of diesel fuel and heating oil. Please read the final part of this series to learn more about US distillate inventories.
Impact on energy stocks and ETFs
Lower gasoline, diesel fuel, and crude oil prices could have a negative impact on US refiners and oil producers such as QEP Resources (QEP), Valero Energy (VLO), Warren Resources (WRES), Denbury Resources (DNR), Tesoro (TSO), Northern Tier Energy (NTI), and Western Refining (WNR).
The rollercoaster ride in crude oil and gasoline prices also impacts ETFs and ETNs such as the DB Crude Oil Double Short ETN (DTO), the iShares Global Energy ETF (IXC), the iShares U.S. Oil Equipment & Services ETF (IEZ), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the VelocityShares 3x Long Crude Oil ETN (UWTI), the Direxion Daily Energy Bear 3x (ERY), the United States Gasoline Fund (UGA), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).