HO · Energy / Inventory
Z1122 – [HO] HO Distillate 5Y Deviation Signal
US distillate inventories are stocks of the same fuel NYMEX Heating Oil futures trade (ULSD). Below-5Y stocks signal direct contract tightness; above-5Y signals oversupply.
At a glance
IN-SEASON · ACTIVE
Current reading
-0.115
SEASONAL STATE
IN-SEASON · ACTIVE
Signal state
Normal
2 days in Neutral phase
Phase
+0.16
Positive equals inventory below 5y regime; negative equals inventory above 5y regime.
Sample
Multi-year window
Daily cadence
As of Nov 06, 2026. Updated nightly.
SIGNAL OVERVIEW
US distillate inventories are stocks of the same fuel the NYMEX Heating Oil futures contract trades, Ultra-Low Sulfur Diesel (ULSD) and No. 2 fuel oil. When those stocks sit below their 5-year seasonal band, Heating Oil’s own physical supply is running tight, and the signal reads as a structural tightness condition on the contract. Inventories above the 5-year band signal oversupply. The empirical phase pattern (see regime table) shows Phase +1 (Inventory below 5Y) delivers +0.73 pp edge on 34 percent sample; Phase -1 (Inventory above 5Y) delivers +0.85 pp on 35 percent sample. 0.12 pp spread via the distillate inventory 5-year deviation channel.
LIVE CHART
HO HO Distillate 5Y Deviation Signal
What the chart is showing right now. The dark line is the HO Distillate 5Y Deviation composite value, tanh-bounded. The bronze line in the middle panel is NYMEX Heating Oil front-month continuous close. The bottom panel tracks the trailing 252-day Spearman information coefficient. Positive composite reflects inventory below 5y regime; negative composite reflects inventory above 5y regime.
COMPOSITE
-0.115 / tanh
STATE
Normal
PHASE
+0.16
PHASE +1 EDGE
+0.73 pp
PHASE -1 EDGE
+0.85 pp
TODAY’S PLAYBOOK READING
STATE
NORMAL
STATE AND HISTORY
HO Distillate 5Y Deviation signal firing at composite -0.115, 2 trading days running in current phase. Phase +1 delivers plus 3.43 percent Heating Oil fwd60d; Phase -1 delivers plus 3.55 percent.
THE MECHANISM
The signal takes EIA weekly US distillate fuel oil ending stocks minus 5-year seasonal mean, divided by 5-year seasonal standard deviation, sign-flipped so below-band maps to positive, tanh-bounded.
HOW TO POSITION
HO Distillate 5Y Deviation overlay for Heating Oil. Phase +1 firings reflect inventory below 5y regime. Phase -1 firings reflect inventory above 5y regime. Pair with related HO signals for stacked conviction.
WHAT THE CHART SHOWS
The composite sits at -0.115 in the current band. HO Distillate 5Y Deviation signal reading in current regime through late 2026.
TOP INPUTS FIRING
- Primary composite -0.115 State Normal, 2 days running in current phase.
- 0.12 pp spread, distillate inventory 5-year deviation channel Phase +1 edge +0.73 pp on 34 percent sample; Phase -1 edge +0.85 pp on 35 percent sample via distillate inventory 5-year deviation channel.
THE TAKEAWAY
What this means for you today
THE CALL
Composite -0.115, current state Normal. HO Distillate 5Y Deviation signal reading in current band through late 2026. Phase Neutral firing for 2 trading days.
THE EMPIRICAL CONTEXT
Phase +1 edge +0.73 pp on 34 percent sample. Phase 0 edge -1.77 pp on 31 percent sample. Phase -1 edge +0.85 pp on 35 percent sample. 0.12 pp spread.
THE HONEST CAVEAT
5-year rolling band includes atypical 2020 COVID + 2022 Russia episodes. EIA weekly data has 5-day publication lag. Seasonal band computation changes as sample rolls. Daily IC not individually significant on all sampling windows.
THE REGIME MAP
The three phases, Heating Oil forward returns and sample share
Regime table captures phase-conditional edges on Heating Oil forward 60-day returns from live-window trading days. Phase +1 minus Phase -1 spread via the distillate inventory 5-year deviation channel.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Inventory below 5Y | +1 | 34.5% (3109 d) | +3.43% | +0.73pp | Oct 2026, Sep 2026, Aug 2026 | |
| Normal TODAY | 0 | 30.9% (2789 d) | +0.94% | -1.77pp | Nov 2026, Oct 2026, Oct 2026 | |
| Inventory above 5Y | -1 | 34.6% (3124 d) | +3.55% | +0.85pp | Nov 2026, Oct 2026, Oct 2026 |
The historical pattern
Signature episodes
What this measures
US distillate inventories are stocks of the same fuel NYMEX Heating Oil futures trade (ULSD). Below-5Y seasonal band signals direct physical tightness on the contract; above the band signals oversupply. Target NYMEX Heating Oil front-month continuous.
Why it matters
Why HO Distillate 5Y Deviation matters for Heating Oil
US distillate inventories sitting below their 5-year seasonal band signal structural supply scarcity that transmits bullish Heating Oil via inventory-tightness pressure; inventories above 5Y band signal supply surplus bearish HO. The signal takes EIA weekly US distillate fuel oil ending stocks minus 5-year seasonal mean, divided by 5-year seasonal standard deviation, sign-flipped so below-band maps to positive, tanh-bounded. Transmission is via the distillate inventory 5-year deviation channel.
How to use this signal today
HO Distillate 5Y Deviation overlay for Heating Oil. Phase +1 firings reflect inventory below 5y regime; Phase -1 firings reflect inventory above 5y. Pair with companion HO signals listed in Related.
Risk overlay
Three limitations. 5-year rolling band includes atypical 2020 COVID + 2022 Russia episodes. EIA weekly data has 5-day publication lag. Seasonal band computation changes as sample rolls. Daily IC not individually significant on all sampling windows.
Signal consumers and siblings
Not investment advice · The analysis on this page is informational and educational. Signal readings, historical case figures, and empirical statistics are derived from publicly available data and are provided without warranty. Hypothetical performance results have inherent limitations, including the benefit of hindsight. Readers who intend to trade should consult a licensed investment professional and see the research brief for the full disclaimer.
Last refreshed Nov 08, 2026 08:15 PM ET