We use fuel oil for a lot of things–furnaces, tractors, motors, vehicles. Heating oil, like gas, is a commodity, but it’s also one of the largest fluctuating resources we have. Some days, oil is on the rise, other days, it is low. Heating oil is used for domestic heating purposes and in some industrial burner units. In recent news, gas prices were beginning to drop, which also means heating oil, too, may see the same sort of trend. However, a very cold winter could result in the rise of these prices again.
Right now, sources are claiming that you might be paying less this winter for oil used in heaters and furnaces. Why is that? Much like gasoline, fuel oil for heating is all dependent on refineries and other factors that might come into play.
Supply & Demand
Whenever there is a higher demand of fuel, we see sky-rocketing prices, simply because fuel is a commodity–especially in the winter. This is a positive aspect for refineries, but not so great for residents who require the fuel oil to heat their homes during the coldest months of the year. When more people need it, the prices go up, but this year–not so many people might require a lot of heating oil to warm their homes.
According to Market Realist, in Febuary 2015, heating oil prices averaged $3.19 per gallon, and a week later, it raised more than a dollar. Heating oil prices are linked to crude oil prices–when one falls, the other follows, and vice versa.
Forecast
If you recall, the eastern and midwest regions in America had one of the coldest winters earlier this year, with a January 2015 North American blizzard. This year, the National Oceanic and Atmospheric Administration is forecasting a less harsh winter, which will minimize the amount of consumers needing heating oil.
Along with that, crude oil prices are expected to lower, meaning it is projected that residential heating oil prices will also fall. The U.S Energy Information Administration predicts a $0.92 difference than last year’s price per gallon. To top that, they also forecast that fuel oil for heating will cost residents roughly $1,645 this winter–$710 less than last year.
About the Author: Nick is a guest contributor from Rural Energy Enterprises, a leading wholesale distributor of heaters, stoves, furnaces and more.
