NEW YORK, March 4, 2026, 13:55 (EST) — Regular session
- NYMEX April ULSD (heating oil) rose about 2.2% to $3.2584 a gallon.
- Fresh U.S. government data showed distillate inventories rose last week, even as war risk stayed front and center.
- Traders are watching Gulf shipping headlines, Friday’s U.S. jobs report and next week’s EIA inventory update.
NYMEX ultra-low sulfur diesel (ULSD) futures — the contract traders use as a proxy for heating oil and diesel — climbed on Wednesday, tracking a firmer oil complex as the Middle East conflict kept supply risk priced in. The April contract was up 7.15 cents at $3.2584 a gallon. 1
The move matters because distillates sit at the intersection of transport fuel demand and winter heating, and ULSD can move fast when traders start to hedge disruption risk. In this tape, the swing factor is not just demand, but whether barrels can move through key chokepoints.
U.S. commercial crude oil inventories rose by 3.5 million barrels last week, while distillate fuel inventories increased by 0.4 million barrels and remained about 3% below the five-year average for this time of year, the Energy Information Administration said on Wednesday. Refineries ran at 89.2% of operable capacity, and distillate fuel production averaged 4.8 million barrels per day. 2
Oil’s geopolitical premium stayed in focus after further U.S. and Israeli strikes against Iran snarled flows and left shipping through the Strait of Hormuz effectively stalled for a fifth day, a key conduit for Middle East energy exports. UBS analyst Giovanni Staunovo wrote that traders “expect a de-escalation,” but he flagged the risk of more shut-ins if disruption persists; Dennis Kissler at BOK Financial said to “look for price volatility” to continue. 3
Banks are also leaning into the upside-risk framing. Goldman Sachs raised its second-quarter 2026 average Brent forecast by $10 to $76 a barrel, saying the assumptions rest on low Hormuz flows tightening inventories; “Brent prices would likely reach $100” if the disruption drags on, the bank said. 4
Heating oil often trades as a high-beta expression of crude moves, but it can also break away when diesel supply looks pinched. Traders watch the ULSD “crack spread” — the margin implied by refining crude into distillates — for signals that refiners may chase diesel output or, alternatively, struggle to keep up.
But this rally has an obvious trapdoor. If diplomacy opens lanes and tanker traffic normalizes, the risk premium can unwind quickly, and the latest inventory build gives bears something to point to if refinery output holds and late-winter demand fades.
Next up is U.S. macro: the Labor Department’s monthly employment report is due Friday, March 6, and investors are already bracing for a softer payroll print after February’s ADP data; the same week brings a Federal Reserve meeting on March 17-18 that could reshape the dollar and demand expectations. 5
On the supply side, the next EIA weekly petroleum report is scheduled for March 11, with traders looking for any sign that distillate stocks are tightening again — and, before then, for any clear shift in shipping conditions around Hormuz. 6
