Why Have Heating Oil and Distillate Prices Been Volatile?

A distillate is any liquid product that has been heated into a vapor and then condensed back into liquid form during the refining process. When raw crude oil is boiled inside a refinery’s distillation column, its different chemical components separate based on their boiling points, with lighter vapors rising, cooling, and liquefying at different heights in the tower, creating streams of distillates. 

All oil products are distillates, but they are classified in four categories: light, medium, heavy, and residuals. In an April 21, 2026, Barchart article that asked why gasoline and heating oil diverged, I concluded with the following:

The bottom line is that crude oil and oil product prices will be volatile. A peaceful settlement could cause a substantial price decline, while any escalation of the conflict could send prices appreciably higher. Volatility in markets creates trading opportunities. However, any risk position in crude oil and oil products requires careful attention to risk-reward dynamics in the current environment. 

Nearby NYMEX heating oil futures were trading at $3.5806 per gallon wholesale on April 20, and while prices have been volatile in recent weeks, they were lower on June 12, 2026. 

Gasoline is a light distillate

Gasoline has the lowest boiling point, making it a light distillate. Other light distillates include liquefied petroleum gas (LPG) and naphtha. The light distillates are required for car fuel and chemical feedstocks. In the United States, gasoline is blended with ethanol, reducing some emissions. 

West Texas Intermediate is the benchmark crude oil grade, light and sweet with a low sulfur content. WTI and condensate are low-density, high-API-gravity mixtures of hydrocarbon liquids that exist as a gas underground and condense into liquid form when brought to the surface. The oil industry often refers to condensate as white oil or natural gasoline. 

While gasoline is a distillate, it is the lightest in the class. WTI crude oil tends to come from North America. 

Heating oil, jet fuel, and diesel are middle distillates

Middle distillates have medium-level boiling points. Heating oil, kerosene, jet fuel, and diesel fuel are medium distillates. Commercial trucking, aviation, and space heating are medium distillate fuels. 

Brent North Sea is the benchmark crude oil grade that is slightly heavier and less sweet, meaning it has a slightly higher sulfur content. The Brent benchmark reflects crude oil from Europe, Africa, Russia, and the Middle East. 

Other distillate categories

Heavy distillates have high boiling points and tend to have higher sulfur content, making them sour crude oil. Heavy fuel oils, lubricating and motor oils, and waxes are heavy distillates. Industrial machinery lubrication and marine fuel are the primary uses. 

At the bottom of the crude oil barrel are the residuals, which do not vaporize at any temperature and have a sludgy consistency. Examples of residuals include fuel oil, asphalt, and bitumen used for paving roads and roofing, as well as bunker fuels for large container ships. 

Heating oil futures have been most impacted by Middle East events

Since Brent is the benchmark for crude oil from the Middle East, it price has been most affected by the hostilities in the Middle East between the U.S. and Iran and the closure of the Strait of Hormuz. Approximately 20% of the world’s seaborne crude oil travels through the Straight, and Brent is the benchmark for two-thirds of the global oil production. The conflict has put Brent in the spotlight, with distillate prices soaring on supply fears. Since NYMEX heating oil is a proxy for other medium-distillate fuels, its price has been the most volatile in recent weeks and months.

The daily continuous NYMEX heating oil futures chart shows that the oil product rose 125.4% from a 2026 low of $2.0469 to a high of $4.6130 per gallon wholesale. At the $3.45 level on June 12, the distillate fuel proxy futures contract was over 68.5% higher than the 2026 low. 

Over the same period, NYMEX crude oil futures rose 114.3% from the low to the high, and were 55.3% higher than the 2026 low on June 12. Brent crude oil futures rose 100.8% from the low to the high, and were 56.9% higher than the 2026 low on June 5. Meanwhile, NYMEX gasoline futures rose 126% from the low to the high, and were 50.1% higher than the 2026 low on June 12.

Heating oil futures outperformed NYMEX WTI and ICE Brent futures in 2026. While gasoline futures mostly kept pace with medium distillate futures, gasoline is now in the peak driving season, when demand rises to an annual high. Therefore, gasoline typically far outperforms heating oil futures from the January off-season demand lows to June when driving increases. Medium distillate fuel prices remain atypically elevated due to supply concerns as the hostilities in the Middle East threaten to escalate and the Strait of Hormuz remains closed. 

Expect lots of volatility in heating oil futures over the coming weeks and months

Gasoline is a seasonal fuel that typically reaches annual highs during spring and summer and lows during fall and winter. Heating oil may sound seasonal, but its role as a proxy for the other medium distillates makes its price action more stable from a seasonal perspective. 

Heating oil futures are likely to continue to experience the most volatility over the coming weeks and months. As a medium-distillate proxy, heating oil prices significantly impact inflation, as the trucks that bring products to market require diesel fuel, and airline ticket prices are highly sensitive to jet fuel prices.  

An end to hostilities in the Middle East and reopening of the Strait of Hormuz would likely cause oil and oil product prices to decline, with heating oil and other medium distillates leading the way on the downside. However, an escalation in the region could push prices higher, above the early March high, and a challenge to the Q1 2022 all-time high of $4.6709 per gallon wholesale. Heating oil futures soared to that price in March 2022 when Russia invaded Ukraine, causing supply concerns as Russia is a leading crude oil-producing country and cooperates with the international oil cartel on production policy. NATO countries imposed sanctions on Russian petroleum, which is priced on the Brent benchmark. 

Expect a continuation of high volatility in distillate product prices, and you will not be disappointed. Distillates are a critical factor for inflationary pressures.