This weather has provided little support for heating oil demand in the US this winter to date. Since the start of December, cumulative heating degree days for oil based homes have been below that of the last ten years, with the exception of a very warm 2006. The peak of winter heating demand typically takes place in late January or early February, a period which is moving into coverage under extended 15 day forecast
A very mild Russian winter has left Russian refiners unusually long of fuel oil and has depressed domestic retail prices well below the export netback. This surplus, coupled with strong demand for fuel oil from Japan, has led to a surge in exports to Asia, lifting European HFSO cracks in the process.
Making headlines this week was the announcement from the Obama administration that the proposed Keystone Pipeline project would be rejected, as the US State Department recommended that the presidential permit be denied as it did not serve the national interest. More specifically, the accelerated timeline that was put into place under the Temporary Payroll Tax Cut Act approved at the end of 2011 did not allow the State Department sufficient time to review the elevated concerns around the environmentally sensitive areas in Nebraska and potential rerouting of the pipeline. The State Department previously said that this review was expected to take until 1Q2013 to be completed, and without that time, an approval decision was not deemed feasible.