Like its name suggests, heating oil is almost exclusively used as a flammable, liquid petroleum product for furnaces and boilers. Heating oil is classified as a hazardous material and has consequently earned negative attention from environmentalists and state legislatures. Presently, 25% of a barrel of crude oil goes to the production of heating oil, which is the second largest cut after petrol. The amount of trading options (i.e. options on futures, calendar spread options, crack spread options, etc.) for heating oil gives traders the ability and flexibility to manage price risk.
Heating Oil Contract Specifications
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Heating Oil Facts
Heating oil is derived directly from crude oil, and accounts for about 25% of the yield. Heating oil is primarily used for residential heating, generally in the Northeast region of the country accounting for about 70% of heating oil consumption in the U.S. Over 8 million households rely on heating oil, but the demand for this energy has decreased as households switch to another source of energy like natural gas. Refineries in the U.S. are responsible for producing 85% of distillate fuel which includes heating oil and diesel. The usage of this distillate fuel is over 3 million barrels a day in the United States, while the U.S. exports distillate fuel at an average rate of over 200 barrels per day.
Source: Barchart
Last updated September 2015.