Cold weather and oil supply shortages have brewed into the perfect storm for heating oil, which reached a 7-year high on Thursday. This January, heating oil futures (Feb' 22), which trade on the NYMEX, gained +11.57% after rising +12.9% in last year's closing month.
According to the U.S. Energy Information Administration (EIA), most heating oil is extracted from crude oil and is sold mainly for use in boilers and furnaces for space heating, and in water heaters. Crude oil (WTI) hit two-month highs on Wednesday on tight supply as inventories in the United States, the world's top consumer, fell to their lowest since October 2018. Heating oil prices followed in midst of rising heating demand during the winter season.
With exposure to heating oil, the WisdomTree Heating Oil (HEAT, OD7I) has risen around +7% in January and +20% since November. The exchange-traded-commodity (ETC) tracks the Bloomberg Heating Oil Subindex, designed to reflect the movement in the price of the heating oil futures contracts. The ETC has a management fee of 0.49% and trades on the London Stock Exchange (HEAT, in USD) and the Deutsche Börse Xetra (OD7I, in EUR)
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