Heating oil is usually included in the distillate fuel oil family as designated by refineries. These distillates can include diesel fuel and heating oils which is why the heating oil futures contract may be considered for use in hedging for diesel fuel and jet fuel. Fuel oil - or No 2 fuel oil - is usually the second largest resultant "cut" from a barrel of crude oil after gasoline. Delivered by tanker truck to residential and commercial buildings, fuel oil can be stored in tanks until required for boiler or forced air furnaces.
The top five consuming states are shown in the following illustration:
Distillate products from domestic sources or imports from Canada or Venezuela may be shipped all over the United States via pipelines, tankers, and rail cars. Central distribution areas (like New York Harbor) or storage terminals may hold fuel oil until redistribution. In the United States, the typical season for heating oil use is from October through March. Refiners often produce heating oil throughout the summer and fall months and store it for winter use; however, they may also refine heating oil in the winter.
Like gasoline, the price of heating oil is determined by more than one factor. Costs to produce and distribute the product are just a couple of examples. Overall, the following chart illustrates the rough components:
*Data courtesy of EIA
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