German heating oil demand surges as diesel declines

German heating oil sales have hit their second highest weekly average this year on the back of falling prices and low household stocks.

Daily average traded volumes rose by 45pc last week compared with the previous week, with increases in all regions.

Lower prices are the main reason for the growth in demand. The volume weighted average cost of heating oil in Germany was around €79.40/100 litres last week, the lowest since the start of the year.

A significant factor behind the low heating oil price is a drop in the value of Ice gasoil futures, which has been driven by a diesel surplus in Europe.

Low household stocks are also supporting German heating oil demand. Stocks reached a year-to-date low at the start of May, as in previous years, Argus MDX data shows.

In contrast, German diesel sales dropped slightly last week, as an uptick in demand from the agriculture sector was offset by lower-than-expected demand from industry and logistics.

There have been some tentative signs of economic recovery that may support diesel demand. Mileage of trucks on German motorways was up on the year in April and 1pc higher than in March, data from the federal statistical office Destatis show. This was the first year-on-year increase since August 2022.

Construction activity in Germany rose by 3.9pc in January-March compared with the final quarter of 2023.

By Johannes Guhlke