COT Report for Diesel Traders: NY Harbor ULSD, Distillate Stocks, and a Crack at the Top of Its Range

Key takeaways

• The CFTC contract is NY Harbor ULSD (code 022651). It settles on ultra-low-sulfur diesel, not on heating oil, so it is a freight and industrial contract with a winter heating tilt on top, not a weather contract.
• The physical trade dominates it. Producer/Merchant is 68.1% of open interest and net short 83,813 contracts, against total open interest of 284,157.
• Managed Money is only mildly long: net +17,342, a z-score of +0.14 and a 156-week COT Index of 72.9. Positioning is not the crowded part of this market right now.
• The fundamentals are. Distillate stocks were 104,187 thousand barrels for the week ending 28 August 2026, the lowest reading for that calendar week in five years and 6.8% below the lowest of the prior five years.
• The distillate crack against WTI was 106.93 $/bbl on 1 September 2026, the highest of 270 daily observations since June 2025, against a median of 47.91 for that window.
• Distillate has the strongest inventory statistic of any energy market we tested (t=+2.69) and it still fails our publication bar on independent sample size. We publish the failure rather than the number.

Introduction

The contract most traders call heating oil has not primarily been a heating-oil contract for years. It settles on ultra-low-sulfur diesel at New York Harbor, and diesel is what moves freight, runs farm and construction equipment, and powers industry. Winter heating demand in the US Northeast is one component of that, not the whole of it, and misreading which market you are in is the most common error in this contract.

That distinction matters right now, because the diesel market is in an unusual state: inventories at a five-year seasonal low, a refining margin at the top of its own range, and speculative positioning that is barely stretched at all. This guide covers how to read each of those, and what our measured history says about combining them.

The Contract

NY HARBOR ULSD (CFTC code 022651), 42,000 gallons per contract, delivered at New York Harbor, settling on ultra-low-sulfur diesel. The CFTC positioning history for this series in COTInsight runs back to 13 June 2006.

What drives it. Freight and industrial diesel demand, distillate inventories, refinery run rates, and the crack against crude, with a Northeast winter heating tilt layered on. Because the contract is diesel rather than heating oil alone, read positioning extremes against total distillate stocks rather than against a weather forecast.

It is small. Open interest of 284,157 contracts, the smallest of the four energy markets covered on our Energy Radar and roughly one ninth of NYMEX WTI. As in gasoline, small open interest means positioning can genuinely crowd.

Which Cohorts Matter

From the report dated 25 August 2026:

This is a hedger's market first. Producer/Merchant holds 68.1% of open interest and the top two groups together hold 97.2%. Refiners are structurally long diesel from the moment crude enters the unit and sell it forward, which is why the line is net short 83,813 and stays there. It is a measure of how much production has been priced, not a directional view.

Managed Money is the smaller side here. Net long 17,342, 29.1% of open interest, with 21,468 contracts in spreading. Compare that with RBOB gasoline, where Managed Money runs a long-to-short ratio above 7. In ULSD the ratio is 1.79. The speculative book is two-sided.

Swap Dealers are large and long. Net long 49,510 with a long-to-short ratio of 7.92, the intermediation of consumer hedging: fleets, airlines by proxy, distributors and industrial buyers locking in forward cost. When you see the Swap Dealer line long in a product market, that is usually the consumer side of the physical trade, not a view.

The Current Reading

Managed Money net position in NY Harbor ULSD:

The state is Flip Zone: the net position has crossed back through its own 52-week mean and neither side is crowded. Open interest expanded from 256,560 to 284,157 across five reports, up 10.8%, so the market is growing rather than unwinding.

The gap between the z-score and the COT Index is the interesting part. A z-score of +0.14 says positioning is at its 52-week average. A COT Index of 72.9 says the net position sits in the upper third of its 156-week range. Both are correct. The 52-week window has already absorbed a higher level of positioning that the three-year window still treats as elevated. When those two disagree, the z-score is the one describing what is unusual now, and the COT Index is describing the longer regime. The mechanics are in COT Index explained and the z-score explained.

The Fundamental Picture, Which Is the Stretched One

Distillate stocks: 104,187 thousand barrels, week ending 28 August 2026. The five-year band for that calendar week runs 104,187 to 122,715 with an average of 114,646, so the current print is the base of its own band.

Against the five years before this one, the lowest week-35 distillate reading was 111,801 thousand barrels in 2022. Current stocks are 7,614 thousand barrels lower, which is 6.8% below the five-year minimum and 13.6% below the average of those five years. Distillate has not been this thin for this week of the year in the span the band covers.

The crack tells the same story from the margin side. Using the NY Harbor ULSD spot against WTI, converted at 42 gallons to the barrel:

• 1 September 2026: 106.93 $/bbl. That is the highest of the 270 daily observations in the window COTInsight scores, which runs from 18 June 2025, where the median is 47.91 and the low is 30.40.
• It is not a one-day artifact. The same crack printed 98.2 on 28 August and 101.6 on 31 August, so it has been near the top of the range for two weeks.

A refining margin at the top of its range is the market paying refiners to make more diesel. That is what a genuinely tight product market looks like from the inside, and it is the reason the fundamental half of this contract deserves more of your attention right now than the positioning half.

What the Measured Record Says

We ran the pairing point in time over 1,013 weekly observations from 6 March 2007 to 18 August 2026: the seasonal band at each date built only from prior years, the stock reading being the newest one already public by the COT release Friday, entry at the first NY Harbor ULSD spot print on or after that Friday, horizon 8 weeks.

Baseline for all 1,005 scorable weeks: mean +1.71%, median +1.21%, higher 54.4% of the time.

Low stocks did not precede higher prices. Distillate stocks below the seasonal band preceded a mean 8-week return of +0.24%, weaker than the +6.19% that followed high stocks and weaker than the all-weeks baseline. The same ordering shows up in gasoline, in WTI and in natural gas. Inventories are low because the price has been high, and the price is what mean reverts. It is the opposite of the bullish-draw language the industry uses out of habit, and it is why COTInsight labels inventory states neutrally as above, inside or below the band.

Now the part that decides whether any of it is publishable. Weekly observations of an 8-week window overlap eight to one, so a raw n of 193 is not 193 independent trials. Our publication rule requires at least 30 independent observations and a t-statistic of at least 1 in absolute value:

The distillate high-stock cell has the largest t-statistic in the whole table and it still fails, because 24 independent observations is under the threshold. Two of fourteen tested cells qualified across the energy complex, and neither is in distillate.

That is what a rule is for. A statistic that looks that good is exactly the one you would be tempted to publish and exactly the one where nineteen years of weekly data has produced two dozen genuinely independent trials.

The crack cells are thinner still. Crowded long into a rich crack, meaning a COT Index at or above 80 with the crack in the top fifth of its own three-year range, gives n=40 in distillate, a median 8-week crack change of -2.43 $/bbl and a median price change of -1.39%. Correct for overlap and that is about five independent observations. Energy Radar shows the crack, its percentile and the number of observations behind it, labelled as context, and it is never presented as a base rate.

How to Trade Around It, Carefully

Know which market you are in. ULSD is a freight and industrial contract with a heating tilt, not a heating contract. Read it against total distillate stocks, refinery runs and the crack, not against a cold snap.

Read the hedger line for absorption, not direction. With Producer/Merchant at 68.1% of open interest, the question that line answers is how much production has already been sold forward, which tells you how much supply is committed if the crack stays rich.

Do not assume tight stocks are bullish. Our own measurement says the opposite, and says it across four markets. Tight inventories describe what has already happened. They are a statement about the state of the physical market, not a forecast of the next eight weeks.

Watch for positioning to catch up to the fundamentals. The interesting condition in this contract today is the divergence: fundamentals at an extreme, positioning at its average. If Managed Money crowds into an already rich crack, the crossed cell that follows is the weak one, and you will at least know you are in it.

Where COTInsight Fits

The NY Harbor ULSD market page carries the current positioning read. Inside the app, it sits on the same board as around 350 other weekly-reporting markets, ranked by extremity, with the z-score, 156-week COT Index, regime state, open-interest trend and divergence check on one screen. History runs to 13 June 2006.

Ultimate adds Energy Radar, where the fundamental half of this article lives: the distillate panel puts stocks against the seasonal band, days of supply, product supplied, exports, refinery utilisation and the crack with its percentile and observation count next to the positioning gauge, with the qualifying base rates shown and the failing cells marked as failures. Ultimate also carries the historical outcome statistics per z-score bucket, the twenty-year archive, options exposure, the AI commentary and the TradingView indicator, so the same z-score and COT Index sit on your diesel chart rather than in another tab.

Start with how to read Energy Radar or the field guide to every number on the panel. Related energy markets: crude oil, RBOB gasoline, natural gas. Pricing is here.

Frequently Asked Questions

Is the CFTC heating oil contract the same as diesel?

In substance, yes. The contract is filed as NY Harbor ULSD, code 022651, and settles on ultra-low-sulfur diesel at New York Harbor. It is still widely called heating oil for historical reasons. Read it as a freight and industrial diesel contract with a Northeast winter heating component.

Which cohort should I watch in ULSD?

Managed Money for crowding, from the Disaggregated report. But note that Producer/Merchant holds 68.1% of open interest and Managed Money only 29.1%, so the hedger line carries more of this market than in most contracts.

What is the distillate crack spread?

The ULSD price minus the crude price in dollars per barrel, converting the per-gallon product spot at 42 gallons to the barrel. It is the refiner's gross margin on diesel. On 1 September 2026 it was 106.93 $/bbl against a median of 47.91 over the prior 270 daily observations.

Do low distillate inventories mean diesel prices go up?

Not in the measured record. Over 1,013 weekly observations from 2007 to 2026, distillate stocks below the five-year seasonal band preceded a mean 8-week return of +0.24% (n=178), weaker than the +1.71% all-weeks baseline and far weaker than the +6.19% that followed high stocks. And neither cell clears our publication bar once the overlap between weekly 8-week windows is corrected.

When is ULSD COT data updated?

Every Friday at 3:30pm Eastern, reflecting positions as of the preceding Tuesday. EIA distillate stocks are published separately, on Wednesdays at 10:30am Eastern.