A Cold Winter Would Boost Oil Demand in the US

The warmest winter for more than 30 years reduced fuel oil demand drastically in the United States in 2015/16 and left the country heavily oversupplied with heating oil.

The good news for refiners and heating oil suppliers, however, is that winter 2016/17 will almost certainly be colder, boosting demand in the months ahead.

Heating demand across the continental United States was 16 percent below average between December and February, according to the National Oceanic and Atmospheric Administration (tmsnrt.rs/26T3AhP).

Demand for heating fell more than 21 percent year on year compared with the winter of 2014/15, which was significantly colder than normal (tmsnrt.rs/26T4N8P).

Heating accounts for only a small proportion of distillate fuel oil consumption in the United States. But the mild winter, coupled with sluggish freight movements, cut consumption by almost 37 million barrels between December and February compared with the previous winter.

Distillate consumption was down by about 400,000 barrels per day (bpd), more than 9 percent, from the previous year, U.S. Energy Information Administration data shows


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza