NEW YORK, March 4, 2026, 13:55 (EST) — Regular session
- NYMEX April ULSD (heating oil) jumped roughly 2.2%, finishing at $3.2584 per gallon.
- New U.S. government figures revealed a rise in distillate inventories last week, with war risk still dominating attention.
- Gulf shipping news, Friday’s U.S. jobs data, and the EIA inventory numbers due next week—all three sit squarely on traders’ radar right now.
NYMEX ultra-low sulfur diesel (ULSD) futures—widely viewed as the market’s stand-in for heating oil and diesel—pushed higher Wednesday. Gains tracked strength across the oil complex, with traders keeping a premium on supply risk linked to conflict in the Middle East. April delivery added 7.15 cents, settling at $3.2584 per gallon.
This development is significant: distillates straddle both transport fuel demand and winter heating, and when traders hedge for potential disruptions, ULSD prices can jump sharply. Here, it’s not only about demand swings—the real test is whether barrels actually make it through crucial chokepoints.
U.S. commercial crude stocks climbed by 3.5 million barrels last week, the Energy Information Administration reported Wednesday. Distillate inventories edged up 0.4 million barrels, but stayed about 3% under the five-year norm for this period. Refineries operated at 89.2% of capacity, with distillate output averaging 4.8 million barrels per day.
Oil’s geopolitical premium remained front and center as another round of U.S. and Israeli strikes against Iran jammed up supply routes, effectively freezing shipping through the Strait of Hormuz for a fifth straight day—vital for Middle East crude exports. UBS analyst Giovanni Staunovo said traders “expect a de-escalation,” though he also pointed to the risk of more shut-ins if the situation drags on. Dennis Kissler of BOK Financial expects “price volatility” to stick around. Reuters
Banks aren’t shying away from talking up the upside. Goldman Sachs has bumped its average Brent projection for Q2 2026 up by $10, now calling for $76 a barrel. The firm’s analysts point to tight inventories if Hormuz flows stay low—if that disruption persists, “Brent prices would likely reach $100,” they wrote. Reuters
Heating oil tends to amplify crude’s swings, acting as a sort of high-beta play, though it’s not chained to oil—tight diesel supply can send it in its own direction. Eyes are usually on the ULSD “crack spread,” which tracks the margin refiners get from turning crude into distillates. That spread can hint if refiners are about to ramp up diesel runs or risk falling behind on supply.
This rally’s got a clear pitfall. Should diplomacy clear the way and tankers start moving normally again, that risk premium could come off in a hurry. Plus, with inventories building, bears now have ammo—especially if refinery runs stay steady and late-winter demand slips.
On the U.S. macro front: the Labor Department’s monthly jobs report lands Friday, March 6. Investors are bracing for a weaker payroll figure after February’s ADP numbers. That same week, the Federal Reserve meets March 17-18, a session that could shake up dollar and demand forecasts.
Supply-wise, traders have eyes on the next EIA weekly petroleum snapshot, due March 11. They’re watching for any indication that distillate inventories might be shrinking again — and paying close attention to developments in shipping around Hormuz before the numbers drop.
