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Heating Oil Analysis

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Heating Oil Futures

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.  

Free in-depth analysis of the Heating Oil futures market written by a professional Heating Oil trader.

August 4, 2014

New York Harbor ULSD Futures Broker, Van Commodities, Inc.

Although  Distillate Fuel Oil  inventories  increased by eight hundred thousand barrels Wednesday July 30, according to the  Energy Information Administration (EIA) Weekly Petroleum Status report, overall distillate fuel oil in storage is still at the lower end of its five year range at roughly one hundred twenty six million barrels.

The front month Heating Oil Futures contract (HOU14) has been trading in a thirty-two cent range over the past sixteen months. On June 19 HOU14 traded to an intraday high of 3.0856 on supply anxiety resulting from geopolitical concerns in Iraq. The contract has since dropped roughly eight percent hitting an intraday low of 2.84 on July 15 as much of the market anxiety over supply constraints resulting from geopolitical worries subsided.

HOU14  has been contained in a roughly nine cent range over the past fourteen days and although the contract is moving into an oversold condition, based on several short term momentum studies, the contract may still have some downside potential before finding solid support.

Market participants may be waiting to see the Distillate inventories in storage from  the EIA Petroleum Status Report on August 08. The downside for HOU14 may be somewhat limited and good buying support for the contract might be found in the 2.8200-2.8400 area. Prior to the report resistance may be found in the 2.8800-2.9200 area.

 

May 25, 2013

Heating Oil Futures Trader, Van Commodities, Inc.

The Heating Oil future (HON13) closed down on Friday over three percent from last Monday’s intraday high ahead of the Memorial Day weekend. Several factors during the week may have undermined trader’s view for future global economic growth including a weaker than expected Chinese Purchasing Managers Index (PMI) and uncertainty over the future for US monetary policy;  after Ben Bernanke’s testimony to Congress and the release of the Federal Open Market Committee (FOMC) minutes from their previous meeting .

 

The reversal action to the downside for HON13 on a weekly continuation chart indicates the possibility for further selling next week. The contract trended down throughout the week from a marginally overbought condition on Monday, based on several momentum studies. Initial resistance may come in at 2.8650-2.8725, with further resistance at 2.8850-2.9070. The contract may find some support 2.8120-2.8200, with stronger support at 2.7450-2.7600.

May 06, 2013

Heating Oil Futures Trader, Van Commodities, Inc.

The heating oil future (HOM13) rallied today on the back of geopolitical concerns in the Middle East. Renewed hostilities over the weekend between Israel and Syria have energy traders nervous about the potential for a wider conflict. Israeli missile strikes against Iranian weapons bound for Hezbollah militants, inside Syria, have energy traders concerned about the conflagration in Syria drawing Iran into the mix. Iran is a major supplier of weapons and economic support to both Hezbollah in Lebanon and the Assad regime in Syria.

HOM13 may find initial resistance at 2.9220-2.9460, with further resistance at 2.9600-2.9800. Initial support may come in at 2.8460-2.8650, with further support at 2.7980-2.8220.

 

March 3, 2013

Heating Oil Futures Broker, Van Commodities, Inc.

The Heating Oil Future (HOJ13) bounced over the past two trading sessions, after becoming oversold on the ten percent move down over the prior three week sell off. The supply fundamentals are still positive for heating oil, with inventories eleven percent below the five year average, as reported by The Energy Information Administration (EIA) today. The drawdown of heating oil supplies reported today for the previous week was 2.132 million barrels, higher than market expectations. Although the supply demand function still appears to be constructive for HOJ13 at present, looking forward the contract will probably meet with resistance overhead on the view of reduced demand in the not to distant future.

 

The ten percent, three week sell off in HOJ13, has resulted in an oversold condition based on several short term momentum indicators. Over the near term HOJ13 may find support in the 2.8100-2.8900 area. Initial resistance may come in at 3.025-3.050, with stronger selling at 3.0650-3.1000.

January 21, 2013

Heating Oil Trader, Van Commodities, Inc.

The heating oil future (HOG13) traded up last week on expectations for frigid US weather during the week of January 21. The energy markets also garnered support from a terrorist attack on an Algerian gas plant. Geopolitical issues are never far from energy traders’ minds and any possibility for supply chain disruptions, no matter how far from our domestic markets, leads speculators to bid up prices.

 

The heating oil market has been contained in a 22 month, eighty-two cent trading range, since April 2011. The fundamental supply situation appears to be bullish for HOG13 over the near term, with distillate supplies standing roughly eleven percent below the five year average. The question, looking towards the end of seasonal demand in March, will be the level of heating demand going into the back end of winter.

 

HOG13’s rally, off of Tuesday’s intraday low at 2.9858, started from a moderately oversold condition with the contract finding support at the 200 day moving average (DMA). HOG13 appears to be stuck in a shorter term range from 2.9000-3.1500. From a day trading perspective initial support should come in at 3.0150-3.0400 and further intermediate term support at 2.9750-2.9900. Initial resistance may appear at 3.0775-3.1000 and further resistance at 3.1200-3.1500.

 

November 12, 2012

Heating Oil Broker, Van Commodities, Inc.

Although crude oil inventories in the US are at relatively high levels, in comparison to the five year average, the same does not hold true for heating oil. The last Department of Energy (DOE) heating oil storage report, released November 07, 2012, showed inventory levels were about 24 million barrels below the five year average going into the winter season. HOZ12, the front month December futures contract came into the US trading day November 12, 2012 at the day’s highs and subsequently trended down throughout the US trading session. Energy traders, who normally pay close attention to any saber rattling in the Middle East, ignored reports of renewed tensions between Israel and Syria, which involved a tit for tat exchange of Israeli tank fire for earlier mortar fire by the Syrians. Commodity markets, including the energy sector seem to be paying more attention to the economic slowdown in Europe and whether the US will be able to address the “fiscal cliff” and avert an economic slowdown.

 

HOZ12 is trading in a range of 2.70-3.20. HOZ12 seems to be winding up for a move but the fundamentals are unclear. Some of the factors which traders will be following include; the level of Middle East tensions, global growth prospects, and whether the US winter brings a colder pattern than last year and an increased demand for HO.

 

HOZ12 has worked of its technically overbought condition, from the July lows to October highs, on several short and intermediate term momentum studies. Short term studies have become oversold and intermediate term studies are working their way towards a similar condition. The intermediate term trend appears to be up with the most recent pullback being a correction of the July/October move.

Initial support should appear 2.9200-2.9400 followed by 2.8220-2.9050. Initial resistance could appear 3.0450-3.0640 followed by 3.0890-3.1070.

April 5, 2012

Commodities Trader, Van Commodities, Inc.

Heating oil basis the May futures contract (HOK12) appears to be working off its overbought condition quickly. Yesterdays down move on the back of the Energy Information Administration’s (EIA) release of production, imports and inventories hit the energy complex negatively across the board; due to the larger than expected build in crude inventories. The data for distillates, which includes heating oil and diesel fuel, came in better than expected with a build of 19,000 barrels compared with an estimate for a gain of 500,000. Outside markets also affected the energy complex negatively yesterday due to renewed concerns about Europe resulting in the US dollar trading to a two week high verse the Euro impacting most commodities negatively.

 

Although the heating oil futures contract, basis May (HOK12) caught an upward bounce in today’s trade the heating oil weekly chart scored a minor reversal week to the downside on today’s close, a holiday shortened week due to the Good Friday Holiday. HOK12 looks to have broken down and may head towards the 3.04-3.07 area, where there should be good support for the contract. HOK12’s upward trend is still intact and it appears there is still potential for further upside. The Middle East instability factor is still at play and it would seem market participants will be cautious about pressing the downside too far. If the market, over the intermediate term traded below the $3.02 area we would have to rethink our longer term positive view.

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.

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