The US Energy Department will lend up to 315,000 barrels from its US heating oil reserve. The aim is to ease a winter supply squeeze. That is nearly a third of the 1mn-barrel Northeast Home Heating Oil Reserve. Deliveries must be complete by 13 November.
How the US heating oil reserve loan works
Companies that borrow fuel must return the same volume plus a premium. That way, the reserve fills up again before the 2027-28 winter. The fuel will come from sites in Maine, Massachusetts and Connecticut, and bids are due on 27 October.
Heating oil is close to diesel. Retail diesel has hovered around $6.32 a gallon, after a record $6.52 last month, according to AAA. Moreover, about one-third of New England homes use heating oil.
Senator Susan Collins said the release equals a 13% supply increase for New England. However, some analysts called it “probably inconsequential” for prices.
Stocks and the wider push
Meanwhile, government data showed US crude stocks fell 3.06mn barrels to 412.5mn last week. Analysts had expected a draw of only 820,000 barrels. In contrast, distillate stocks rose 1.68mn barrels to 104.3mn.
Washington has already agreed to lend 172mn barrels from the Strategic Petroleum Reserve, now at its lowest since 1982. In addition, the administration wants refiners to run harder.
For how India’s own buffer compares, read our analysis of India’s strategic reserves.
For a deeper analysis, read: US Heating Oil Reserve Release: 315,000 Barrels Against the Lowest East Coast Stocks Since 1990
