Trading Hours: 9:00 A.M. – 2:30 P.M. (EST)
Contract Size: 42,000 U.S. gallons (1,000 barrels)
Contract Months: All Months
Price Quote: In dollars and cents per gallon: for example, $0.7527 (75.27¢) per gallon
Tick Size: $0.0001 (0.01¢) per gallon ($4.20 per contract)
Last Trading Day: Trading terminates at the close of business on the last business day of the month preceding the delivery month.
Daily Price Limit:$0.25 per gallon ($10,500 per contract) for all months
Fundamental Overview of Heating Oil Futures:
Heating oil, also known as No. 2 fuel oil, accounts for about 25% of the yield of a barrel of crude, the second largest “cut” after gasoline. The heating oil futures contract trades in units of 42,000 gallons (1,000 barrels) and is based on delivery in New York harbor, the principal cash market trading center.
Heating Oil is part of a family of petroleum products called distillates. These are refined at approximately 350 to 800 °F and represent the middle range of refinery products. As a source of heat, heating oil competes with electricity and natural gas.
Since the demand for heating oil is seasonal, stocks will also be seasonal. Demand for heating oil is greatest in the winter, and therefore stocks will be at there largest in the months leading up to the cold winter, mainly October and November. Extremely cold winters result in faster depletion of stocks and higher demand, which in turn means higher prices.
Heating Oil Futures – Key Trading Notes:
Reports – Watch the DOE Weekly Supply numbers.
OPEC still is able to move the market, however, not as radically as it once had. Venezuela tends to produce a little more than OPEC would like. Russia has a vast amount of oil in the ground and they are becoming a bigger and bigger player.
The Mideast always seems to account for a premium in the price of oil. It would be difficult to imagine stability in the area for a long time.