What kind of factors affect oil prices?
Like a number of fuels, home heating oil prices can fluctuate depending on what is going on with the wider market, meaning that the cost of heating oil may not always be consistent throughout the year.
This means that home heating oil users will need to regularly monitor the cost of their heating oil to ensure that they are getting the best possible price at any one time.
Here are just some of the factors that can impact the cost of home heating oil:
Demand from world’s top oil consumers
The United States and China are the top two consumers of oil in the world, and as a result they both have a huge impact on the oil market at large. It is suggested that the better an economy is faring in terms of employment levels and house prices etc, the greater the demand for oil and the higher the price that consumers can expect to pay for oil.
Currently, the US economy has recently been upgraded to ‘stable’ from a previous rating of ‘negative’ in 2011 by ratings agency Standard & Poor, indicating that it is showing tentative signs of recovery. However, experts have argued that China could miss its growth target of 7.5% in 2013 because of low 1% growth in exports in May.
Despite these contrasting figures, the Organisation of the Petroleum Exporting (OPEC) has forecasted that world oil demand will increase to 900,000 barrels per day (bpd) in the second half of 2013, compared to 700,000 bpd in the first half of the year.
As oil is traded in US dollars, the value of the pound against the dollar will have a bearing on oil prices i.e. the stronger the pound, the lower the price you should pay for your home heating oil and vice versa. The latest figures have revealed that the dollar remains higher against the pound.
War and natural disasters
If there is political unrest in a country or the potential threat of war, consumers may ‘panic buy’ large quantities of oil for fear that it will be hard to access this energy source, if a country slips into disarray. As there are a number of key oil producers in the Middle East then any political instability in this region could affect the worldwide oil prices.
Natural disasters can also cut off oil supply. As an example, in 2005 Hurricane Katrina stopped oil production along the Southern Gulf Coast, sending oil prices soaring.
Despite what is happening around the globe you can get the best deal on your home heating oil prices by asking your supplier for home heating oil offers, buying in bulk and buying in the summer months, when oil demand is generally lower.