Bloomberg OCT 12 re Heating Oil In the US, inventories are perilously low ahead of the winter season. It’s the same story for independent stockpiles held in Amsterdam-Rotterdam-Antwerp, northwest Europe’s oil trading hub. Consumption of heating oil -- a diesel-type fuel -- typically rises in winter.
Supply is also being hit by refineries undergoing seasonal maintenance, while some European nations are also starting to claw back the stockpiles they released to curb prices earlier in the year.
See also: France Asks Traders to Return Millions of Barrels of Diesel Soon
The high prices and low inventories are fast becoming a political flashpoint.
In recent weeks US Energy Secretary Jennifer Granholm and other administration officials chastised oil refining executives for low diesel stockpiles, floating the possibility of export limits and a requirement for companies to hold minimum inventories inside the US.
The French government is threatening to take control of some of the country’s biggest refineries that have been halted by strikes, with almost a third of the country’s fuel stations suffering supply shortfalls.
Last month, Switzerland said industrial users should burn heating oil instead of natural gas in dual-fuel power plants from Oct. 1, and that households should start filling their heating oil tanks immediately.
Approaching Winter
“We are approaching the Northern Hemisphere winter, which boosts heating oil demand,” said Jonathan Leitch, an oil analyst at Turner, Mason & Co. “There are also expectations of fuel switching, which means more diesel could be used in power generation if there is not enough natural gas available.”