Heating Oil Futures

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Heating Oil futures are a cash settled futures contract that are unique in the fact that they appeal to both physical and financial traders. Heating oil is settled against the price for Heating Oil in New York Harbor and is settled in dollars and cents per gallon. Heating oil is considered the second most popular byproduct of crude oil and is a mainstay in everyday life.

Heating Oil Futures Markets

The heating oil futures market is a very seasonably driven market. Not surprising, but the main season for heating oil is winter, this is when we see the demand and prices for heating oil at their highest, even if crude prices are stable. That’s not to say the price of crude isn’t correlated to heating oil, because it does play a major factor. Worldwide supply, demand, and weather are all major factors that drive the price crude oil and in turn the price of heating oil. However, the most common culprit for large price swings in heating oil futures is the weather. For example, if there is a large cold front sweeping across the country, the price of heating oil and delivery is going to be higher than it would be if there were a warm front.

Heating Oil Futures History

Heating oil can be traced back to as far as the 1840’s when a scientist discovered you can distill crude oil and use it in a lantern to provide heat and energy. However, it wasn’t until the 1920’s that heating oil came to the public forefront as innovators found it a cheaper and more efficient replacement for coal. Since, then technology has taken over and brought heating oil into the 21st century allowing citizens to dictate the use of it with the touch of a button (thermostat). According to futuresknowledge.com, heating oil is a $16 billion a year business with over 9,000 retail dealers. Heating oil shows no signs of cooling off.

Heating Oil Facts

56% of all U.S. heating oil comes from Texas, California, Alaska, North Dakota, and Oklahoma. Although heating oil is a byproduct of crude oil, there are restrictions on when it can be produced, with most production coming in the fall and summer. While the U.S is the 3rd largest world producer of heating oil, according to the International Energy Agency, the U.S. should jump to number 1 as early as 2020.

Heating Oil Futures Trading

  • Heating oil futures are often bought to hedge against prices of diesel and jet fuel
  • Heating oil is the second largest byproduct of crude oil, trailing only gasoline.
  • Heating oil Futures are traded on the NYMEX and ICE
  • Each heating oil futures contract represents 42,000 gallons of heating oil with a minimum price fluctuation of $.0001 per gallon, or $4.20 per contract. (According to the CME Group)
  • Contracts are deliverable for 18-consecutive months and delivery occurs at New YorkHarbor

Heating Oil Futures Contract Specs

Contract Symbol Contract Unit Price Quotation
HO 42,000 gallons dollars per gallon
Trading Exchange Trading Hours Tick Value
NYMEX ICE 18:00 – 17:00 $0.0001 per gallon

Heating Oil Futures News & Resources

RJO Market Update

Nat Gas Resumes Secular Bear

Macro Market Update

Crude Confirms Intra-Range Base/Recovery Count

Nat Gas Bear Risk/Reward Metrics Getting Questionable “Down Here”

Crude Oil Chippin’ Away at Upper-Range Constraint

S-T Crude Oil Failure a Subset of Correction-vs-Reversal Debate, Challenge

Heating Oil Joins Crude in Base/Correction Threat

Energies Reaffirm Bearish Counts, Define New S-T Risk Levels

Volatility, Relapses Tighten Energies’ Key Directional Flexion Points

Jan Nat Gas Bear Continues, Defines New Risk Levels

Trail Crude Oil Bear Risk