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Home / Education / Markets / Energy Futures Overview / Heating Oil Futures

Heating Oil Futures

Heating Oil Futures Like its name suggests, heating oil is almost exclusively used as a flammable, liquid petroleum product for furnaces and boilers. Heating oil is classified as a hazardous material and has consequently earned negative attention from environmentalists and state legislatures. Presently, 25% of a barrel of crude oil goes to the production of heating oil, which is the second largest cut after petrol. The amount of trading options (i.e. options on futures, calendar spread options, crack spread options, etc.) for heating oil gives traders the ability and flexibility to manage price risk.

Heating Oil Contract Specifications
Contract Size 42,000 gallons
Price Quotation U.S. dollars and cents per gallon
Trading Hours CME Globex: Sunday – Friday 6:00 p.m. – 5:15 pm ET with a 45-minute break each day beginning at 5:15 pm ET
CME ClearPort: Sunday – Friday 6:00 p.m. – 5:15 pm ET with a 45-minute break each day beginning at 5:15 pm ET
Minimum Price Fluctuation $0.0001 per gallon
Product Code CME Globex: HO
CME ClearPort: HO
Clearing: HO
TAS: HOT
Listed Contracts Current Year + 3 Years + 1 Month
Settlement Method Deliverable
Last Trade Date Trading in a current month shall cease on the last business day of the month preceding the delivery month.
Trade At Marker Or Trade At Settlement Rules Trading at settlement is available for spot (except on the last trading day), 2nd, 3rd and 4th months and subject to the existing TAS rules. Trading in all TAS products will cease daily at 2:30 PM Eastern Time. The TAS products will trade off of a “Base Price” of 0 to create a differential (plus or minus 10 ticks) versus settlement in the underlying product on a 1 to 1 basis. A trade done at the Base Price of 0 will correspond to a “traditional” TAS trade which will clear exactly at the final settlement price of the day.

TAM trading is analogous to our existing Trading at Settlement (TAS) trading wherein parties will be permitted to trade at a differential that represents a not-yet-known price. TAM trading will use a marker price, whereas TAS trading uses the Exchange-determined settlement price for the applicable contract month. As with TAS trading, parties will be able to enter TAM orders at the TAM price or at a differential between one and ten ticks higher or lower than the TAM price. Trading at marker is available for spot month on the last trading day.

NY Harbor ULSD Futures (HO) spot, 2nd and 3rd months and nearby/second month, second/third month and nearby/third month calendar spreads.

Settlement Procedures Heating Oil Futures Settlement Procedures
Exchange Rules These contracts are listed with, and subject to, the rules and regulations of NYMEX
Source: CME Group

Heating Oil Facts

Heating oil is derived directly from crude oil, and accounts for about 25% of the yield. Heating oil is primarily used for residential heating, generally in the Northeast region of the country accounting for about 70% of heating oil consumption in the U.S. Over 8 million households rely on heating oil, but the demand for this energy has decreased as households switch to another source of energy like natural gas. Refineries in the U.S. are responsible for producing 85% of distillate fuel which includes heating oil and diesel. The usage of this distillate fuel is over 3 million barrels a day in the United States, while the U.S. exports distillate fuel at an average rate of over 200 barrels per day.

Source: Barchart

Last updated September 2015

Additional Info

Recent Posts on Heating Oil

  • Beyond the Spotlight | Heating Oil, Wheat, & Cotton (2/4/2019)- Beyond the Spotlight for the week of February 04, 2019 covers the Heating Oil, Chicago Wheat, and Cotton markets. Watch now to look ahead with us, while potentially creating additional trading opportunities for yourself.
  • EIA’s June 2017 Short-Term Energy Outlook (6/7/2017)- Senior Broker Andrew Pawielski covers highlights from the EIA’s June 2017 Short-Term Energy Outlook.
  • EIA’s May 2017 Short-Term Energy Outlook (5/10/2017)- Senior Broker Andrew Pawielski covers highlights from the EIA’s May 2017 Short-Term Energy Outlook.

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This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

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