Brent Settles 4% Higher at $113.17 as DOE Offers 315,000 Barrels From Northeast Heating Oil Reserve

ICE Brent December futures settled at $113.17 per barrel on Thursday, Oct. 22, up $4.35 or 4.0%, the contract's highest settlement in ICE data going back to November 2024. The move came a day after the U.S. Department of Energy offered to exchange up to 315,000 barrels of ultra-low sulfur distillate from the Northeast Home Heating Oil Reserve to ease heating oil supply in New England and New York.

Brent Spot Premium to Futures Widens to $12.22

The January contract settled at $108.66, so December's premium widened to $4.51 from $3.75 on Oct. 21, Oil Authority calculations from ICE data. The U.S. Energy Information Administration's Europe Brent spot price rose $8.02 to $125.39 on Oct. 22, $12.22 above the December futures settlement. That spot premium had narrowed to $6.43 on Oct. 20, as covered in our freight report.

The EIA's WTI spot price at Cushing was $104.27 on Oct. 22, leaving physical Brent $21.12 above physical WTI. On a 2 million barrel very large crude carrier cargo, that gap is worth about $42.2 million before freight, insurance and quality adjustments, Oil Authority calculations.

DOE Northeast Home Heating Oil Reserve Exchange Terms

DOE said on Oct. 21 that it will exchange up to 315,000 barrels of fuel oil from reserve sites in South Portland, Maine; Boston; and New Haven, Connecticut, with transfers or deliveries scheduled to be completed by Nov. 13. Borrowing companies must return the same volume plus a premium, so the reserve is refilled ahead of the 2027-2028 heating season. Offers must be between 25,000 and 30,000 barrels, no site may supply more than 150,000 barrels, and bids are due by 11 a.m. Central Time on Oct. 27.

Energy Secretary Chris Wright called the exchange "a temporary measure to solve a temporary supply disruption." The EIA said in its October Short-Term Energy Outlook that East Coast distillate inventories were 32% below their five-year average and that it expects them to remain 20% to 30% below that average through the winter.

Canadian Distillate Supplies Most U.S. Northeast Imports

The EIA said imports supply about 10% of East Coast distillate consumption, mostly from Canada into the Northeast, and typically peak between December and February. That makes Canadian refiners serving Atlantic markets a key source of winter supply alongside the reserve exchange. U.S. distillate inventories rose 1.68 million barrels to 104.29 million in the week ended Oct. 16, according to the EIA's weekly report, as covered in our inventory report.

EIA and IEA Say Record Tanker Rates Lift Delivered Fuel Prices

The EIA said tanker rates reached record levels in September, reflecting higher insurance costs and longer routes, and that these costs put additional upward pressure on delivered crude prices to refiners. The International Energy Agency said in its Oct. 14 Oil Market Report that tanker-rate pressure spreading to other vessel categories could lift delivered diesel prices in Europe, Africa and Latin America.

UK Maritime Trade Operations received a report that a tanker was hit by an unknown projectile 7 nautical miles northeast of Limah, Oman, at 1715 UTC on Oct. 22 while transiting outbound through the Strait of Hormuz. The tanker continued its voyage. Saudi Arabia's Ministry of Energy said on Oct. 21 that debris from an intercepted drone near the Shaybah oilfield did not affect operations, as covered in our Shaybah report.

Brent Spot at $125.39 Runs $20.39 Above EIA's Q4 Forecast

The EIA forecasts Brent spot at $105 per barrel in the fourth quarter, which assumes Middle East shut-ins averaging about 4.5 million barrels per day. The Oct. 22 spot price was $20.39 above that forecast, and the December futures settlement $8.17 above it. Our Oct. 16 settlement report set out the same comparison at $109.86.

DOE Heating Oil Bids Close Oct. 27; EIA Weekly Report Oct. 28

Alberta's weekly indicators report and Baker Hughes' rig count are both due on Oct. 23. DOE will announce awards from the heating oil exchange after bids close on Oct. 27, and the EIA's next weekly petroleum report is due on Oct. 28. ICE settlements will show whether the December contract holds above $110 before it expires at the end of October.