Heating oil is produced from the refining of crude oil. The refining of crude yields 50% gasoline and 25% heating oil. This product of crude oil is also called distillate or Number 2 oil.
Heating oil is used primarily to heat homes in Northeast America. The US produces roughly 85% of its heating oil and imports the rest from Canada, Venezuela and the Virgin Islands. The production of heating oil generally increases in winter to ensure sufficient supply of oil to meet the seasonal demand. Heating oil futures are traded on the New York Mercantile Exchange (NYMEX) and on the ICE Europe Exchange.
Heating Oil Futures: How Weather Impacts Price
Traders dealing in heating oil futures should consider checking weather reports regularly. The importance of weather reports increases substantially during the winter months (from December to February). The focus should be on Northeast USA, as this region accounts for 80% of America’s heating oil consumption.
Trading Heating Oil Futures Tips
– Most profit-making opportunities arise during the winter months. Prolonged periods of extreme cold or an unanticipated cold wave in Northeast USA can cause a rally in the price of heating oil futures
– Buying heating oil futures in winter does not assure success in futures trade. Profit-making opportunities arise only when the weather is colder than anticipated. This results in the higher-than-expected consumption of heating oil during the season, boosting demand.
Heating oil prices typically move in sync with that of crude oil.
Specifications for trading Heating Oil on easy-forex® platform
easyMarkets® Symbol for Heating Oil: HEO
Quote convention: USD per metric ton,. HEO/USD = 1.7200 USD per metric ton.
Expiration date: Commodities and indices are traded as CFDs with easyMarkets and expire at 12:00 GMT. Please note, OIL expiration time is 15:00 GMT. The expiration of each deal is displayed on your trade ticket, open position and on MT4 Market Watch.
easyMarkets® does not rollover expiring deals to the new contract, unless notified beforehand. The client should directly contact easyMarkets one working day before expiry of deal for renewal. Client should note that in the case of renewals, easyMarkets® will not carry the profit or loss to the new deal. Any profit will be credited to your trading account and any loss debited.
easyMarkets also reserves the right not to renew the deal if it so chooses.
If instructed to, as soon as the old deal is automatically closed, a dealer will open a new deal expiring in the new month that follows the expired deal with the same amount and type of the closed deal. The remaining margin on the expired deal will be placed on the new one, unless the client instructs the dealer otherwise. The opening rate of the new deal will be done at the new month’s rate.
Using an OIL/USD deal as an example: at expiry time 12:00 GMT the old contract closing price was at USD35.50 per barrel and the new contract price is trading at $40.50. At expiry, the old deal will be closed automatically at $35.50. Any profit or loss will be reflected in the margin and thus in the free balance. If instructed, the dealer will open a new deal at a price of $40.50 (the price of the new contract at 12:00 GMT), and place an amount equal to the remaining margin on the old deal, unless instructed otherwise.
In order to inquire about expiry date of current contract and difference in prices between the two contracts, please contact your dealer.
Trading hours: Trading is conducted 23:00 until 22:00 GMT, Sunday to Friday with a daily break between 22:00 to 23:00. Outside these hours no opening or closing of deals will be allowed.
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