Heating oil, also known as No. 2 fuel oil, accounts for about 25% of the yield of a barrel of crude, the second largest "cut" after gasoline. In its early years, the NYMEX heating oil contract attracted mainly heating oil wholesalers and large consumers. It soon became apparent that the contract was also being used to hedge diesel fuel, which is similar to heating oil and jet fuel, and which trades in the cash market at a usual stable premium to the NYMEX heating oil contract.

A wide variety of businesses, including oil refiners, wholesale marketers, heating oil retailers, trucking companies, airlines, and marine transport operators, as well as other major consumers of fuel oil, have embraced this contract as a risk management vehicle and pricing mechanism.

Seasonal and economic factors influence the relative prices of heating oil, gasoline, crude oil, natural gas, and propane. By spread trading heating oil futures against other NYMEX futures, businesses are able to fix margins among products. Marketers and traders can also lock in a return for carrying heating oil inventory, by spread trading calendar months.

Because NYMEX heating oil futures are traded over 18 consecutive months, traders can implement hedging strategies that encompass two winter heating seasons.