Low US Heating Oil Stockpiles Could Cause Winter Sticker Shocks  

• Americans could face a sticker shock with their heating bills this winter, especially if it is a chilly one, due to unusually low U.S. stockpiles of distillate fuels following OPEC+ crude supply cuts and higher demand from Europe, analysts said.
• Distillate inventories, which include diesel and heating oil, were by late August about 15% below the five-year average for this time of year, according to the Energy Information Administration. At below 118 million barrels, stocks represented around 31 days of supply.
• "We are living barrel to barrel and there is just no room for errors in the system," Price Futures Group analyst Phil Flynn said. "If we get a cold winter, there are going to be significant price shocks." Refiners have failed to build sizable stocks ahead of the seasonal surge in demand due to tight supplies of medium and heavy crude oil grades that are distillate-rich.
• Production cuts by the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, have already squeezed the global market for medium sour crude and middle distillates, which will be further tightened by Saudi Arabia's unilateral cuts, said Bjarne Schieldrop, chief commodity analyst at SEB.
• In addition, U.S. exports have helped to deplete stockpiles of the fuel amid strong demand from Europe after Russia's invasion of Ukraine last year led to sanctions on Moscow's energy trade. Inventories have also failed to build despite lackluster U.S. demand in the first half of this year as consumer spending shifted to services over goods.

(Source: Reuters)