Principal contributor: Matt French
In late June 2020, weekly distillate inventories in the Northeast United States reached 52.3 million barrels, the largest inventory since late November 2016. Since then, Northeast distillate inventories have declined to 43.7 million barrels as of the week ending January 29. Although inventories declined overall, they were still 10% higher than the previous five-year (2016–20) average for that time of year, according to data in the U.S. Energy Information Administration’s (EIA) Weekly Petroleum Status Report. About 80% of the U.S. homes that use distillate fuel as their main heating fuel are in the Northeast.
Northeast distillate inventories (defined as those in Petroleum Administration for Defense Districts, or PADDs 1A and 1B) more than doubled over the span of 13 weeks, from 22.3 million barrels in late March 2020 to 52.3 million barrels in late June. Although inventories have declined, high inventory levels going into the current winter heating season along with relatively warm winter weather through January that reduced the need for heating fuels have contributed to Northeast distillate inventories remaining higher than the previous five-year average.
Winter temperatures in the Northeast, as measured by population-weighted heating degree days from October 2020 through January 2021, were approximately 7% lower than the previous 10-year average for those months. (Data values for home heating fuels and weather data reflect the Northeast Census Region, which includes all the states in PADDs 1A and 1B except Maryland, Delaware, and the District of Columbia.)
In its most recent Short-Term Energy Outlook (STEO), EIA expects that distillate fuel levels on the East Coast (PADDs 1A, 1B, and 1C) will continue to decline and remain near the previous five-year average values through February and March. EIA uses weather forecasts from the National Oceanic and Atmospheric Administration (NOAA) in the STEO forecast, and the NOAA forecast in this STEO is from late January. More recent forecasts for mid-February weather show cold temperatures could extend across much of the United States, which creates the possibility of greater inventory drawdowns than forecast. Despite the possibility of increased drawdowns, home heating oil supply in the Northeast will likely remain sufficient through the remaining weeks of winter.