November heating oil prices established a higher high this morning, marking a $0.17 rally from this week’s low. The gains in heating oil appeared to be the result of an improving outside market tone, a rally in global equity markets and ideas that the global economy might be on a recovery track.

January heating oil prices have experienced a bounce higher during the initial morning hours. Perhaps some of the gains came in response to inventory data out of Germany that showed a decline in heating oil stocks from colder winter temperatures. Meanwhile, US heating oil stocks at 38.836 million barrels are the lowest for this week since 2008. EIA heating oil stocks rose 886,000 barrels and are 10.954 million barrels below last EIA distillate stocks rose 480,000 barrels. Current inventories stand at 19.803 million barrels below last year and 2.835 million below the five year average. Distillate imports came in at 118,000 barrels per day compared to 198,000 barrels the previous week. Average total distillate demand for the past four weeks was up 1.85% compared to last year.

March heating oil prices established a higher high during the overnight session, seemingly in response to private industry data late Tuesday that showed a larger than expected draw in distillate supplies last week. It seems that a weakening macroeconomic tone this morning, with a sell off in global equity markets and the Euro currency, subsequently pressured heating oil prices lower. Estimates for this morning’s EIA report are for a draw in distillate supplies in the neighborhood of 750,000 barrels.

March heating oil traded higher during the overnight and early morning hours. Some traders indicated that the market seemed to discount reports from the National Weather Service that estimated this week’s heat-related consumption to run more than 26.5% below normal. This follows a slight, 3% uptick in demand last week. The Commitments of Traders Futures and Options report as of January 17th showed non-commercial traders were net long 20,487 contracts, an increase of 2,855. Non-commercial and non-reportable traders combined held a net long position of 43,166 contracts, an increase of 2,318 on the week.

February heating oil prices broke out to their highest levels since November 18th overnight but have since moved into negative territory. This marks a more than 12.0% rally off of the December low to the overnight high. This prompted some traders to suggest that a correction might be in the offing. Expectations for this morning’s EIA inventory report are for a weekly build in the neighborhood of 1.5 to 2.0 million barrels.

While February heating oil prices might have garnered an early morning lift from a favorable risk-on attitude, some traders question the US supply and demand picture. US distillate demand fell more than 8.0% below year ago levels in the latest EIA report, and that figure is expected to remain under pressure due to the unseasonably warm temperatures in the US. That was highlighted in the latest IEA monthly report that lowered their 2012 global oil demand target, partially in response to unseasonably warm northern hemisphere temperatures.

Heating Oil futures followed the energy markets higher in Tuesday’s session, triggering a technical breakout and closing on the highs. With new sanctions rapidly affecting Iran’s domestic economy and potentially cutting off their oil exports, the fundamental backdrop may prove strongly supportive of the uptrend identified in the chart analysis below.

Homeowners who use natural gas to heat their homes will see an even bigger drop in winter fuel bills than previously expected, government forecasters said Tuesday.

The Energy Information Administration said the 57.6 million households across the nation that use gas as their primary heat source will pay an average of $671 this winter, down 7.3% from a year ago. Last month, the EIA projected a 3.3% drop from last year.

February heating oil led the crude oil complex higher during the initial morning hours, helped by a softer US dollar and higher risk assets. It is possible that heating oil drafted an added level of support from overnight data that pegged India’s November diesel demand up nearly 17% from year-ago levels. Heating oil prices slipped in response to yesterday’s EIA data that showed a larger than expected build in distillate stocks, up 3.224 million barrels last week. Still, current inventory levels remain 18.529 million barrels below last year and 2.149 million below the five year average. Distillate imports came in at 229,000 barrels per day compared to 166,000 barrels the previous week. Average total distillate demand for the past four weeks was up 0.90% compared to last year. EIA heating oil stocks fell 1.865 million barrels. Current inventory of 37.023 million barrels is the lowest for this week since 2007.

European shares and U.S. markets are climbing higher after China post healthy trade number, putting markets on a positive territory to a broad based recovery. The renewed risk appetite is helping growth sensitive commodities including crude oil.

January heating oil prices traded higher overnight in response to private industry data that showed a much larger than expected decline in distillate supplies last week. The figure was substantially larger than expectations for this morning’s EIA report for a decline of 1.0 million barrels. Some traders indicated the possibility for a distillate supplies to have fallen by less than expected due to the extremely warm temperatures in the Northeast that have reduced heat-related demand.

January heating oil prices grinded lower during the initial morning hours, following soft economic readings overnight and weakness across the crude oil complex. Some traders indicated that US distillate inventory readings late yesterday showed a smaller than expected draw. Expectations for this week’s EIA distillate inventory data are for a 1.5 to 2.0 million barrel decline.

January heating oil prices grinded higher during the initial morning hours, supported by US dollar weakness and higher crude oil prices. Some technical traders noted that there was a shelf of support below the market, which seemed to stall yesterday’s weakness. Expectations for this week’s EIA distillate inventory data are for a 1.5 to 2.0 million barrel decline as the market becomes more balanced.

December heating oil prices began the overnight session on a weak note but managed to rebound from an early test of yesterday’s low. The outside market tone is supportive for heating oil prices this morning and Brent crude oil prices are up nearly $2.00 on the session. There have been some concerns over falling Midwest diesel prices as Gulf coast supplies have arrived in the region and there has been a boost in refinery activity. At least in the early morning action, December heating oil is choosing to look at outside markets for direction.

Referenced Stocks: GDX, GLD, SLV, UNG, USO

Commodities finished trading lower as crude oil futures fell below $100 as losses gained in the final push of the session at the New York Mercantile Exchange. Gold slipped over 3%.

Light, sweet crude oil for December delivery finished down 3.7% to $98.82 a barrel. In other energy futures, heating oil was down 1.57% to $3.08 a gallon while natural gas was up 1.97% to $3.41 per million British thermal units.