Rix Group Home Reset
  • Shop
  • Search
  • My Account
  • 0800 542 4207
  • Rix Logo Large
    • Search
    • Contact
      • Rix
      • Account
      • Search
      • My Depot
        • Energy Saving Tips
        • Domestic
              • You’re searching Region in Section

                  • Domestic Fuels

                    • Domestic Heating Oil
                    • K+ Heating Oil
                    • AGA Cooker Fuel
                    • HVO Heating Oil
                  • Domestic Services

                    • Heating Services
                    • Oil Boiler Service & Repair
                    • Heating Oil Fuel Tanks
                    • Tank Health Check
                    • Oil Boiler Insurance
                    • Heating Oil Monthly Payment Plans
                    • My Account Request
                  • Domestic Info

                    • Customer Reviews
                    • How Often Should your Boiler be Serviced?
                    • What is Heating Oil?
                    • How Does a Heating Oil System Work?
                    • Energy Saving Tips For Your Home
                    • Heating Oil Price Guide
                • Popular Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Recommended Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Get Your Heating Oil Quote
                • Contact your depot
        • Agriculture
              • You’re searching Region in Section

                  • Agri Fuels

                    • Red Diesel
                    • Agricultural Gas Oil+
                    • Road Diesel for Farms
                    • Kerosene
                    • Agricultural Superheat35
                    • Agricultural Lubricants
                    • AdBlue for Farms
                    • HVO Renewable Diesel
                  • Agri Services

                    • Agricultural Heating Services
                    • Agricultural Forward Purchase
                    • Agricultural Fuel Tanks
                  • Agri Info

                    • MSDS Downloads
                    • Apply for an account
                    • Fuel Quality
                    • Agricultural Fuel Cleaning
                • Popular Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Recommended Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Get Your Heating Oil Quote
                • Contact your depot
        • Commercial
              • You’re searching Region in Section

                  • Commercial Fuels

                    • Red Diesel Tax Changes
                    • Diesel
                    • Diesel +
                    • Commercial Gas Oil
                    • Commercial Gas Oil +
                    • Superheat 35
                    • Commercial Kerosene
                    • Commercial Lubricants
                    • AdBlue
                    • HVO Renewable Diesel
                  • Commercial Services

                    • Commercial Heating Services
                    • Commercial Forward Purchase
                    • Commercial Fuel Tanks
                    • Fuel Cards
                  • Commercial Info

                    • National Accounts
                    • MSDS Downloads
                    • Apply for an Account
                    • Fuel Quality
                    • Haulage Fuel Cleaning
                • Popular Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Recommended Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Get Your Heating Oil Quote
                • Contact your depot
        • HVO
        • Info
              • You’re searching Region in Section

                  • Information Hub

                    • Information help centre
                    • Customer Reviews
                    • Covid Information Centre
                    • Covid Risk Assessment
                  • My Account Request
                  • About Rix

                    • Family owned business
                    • Communities
                    • CSR Policy
                    • History
                    • Our Companies
                    • Long Term Vision
                    • News
                    • Blog
                  • Legal & Privacy

                    • Careers
                    • Complaints
                    • GDPR Policy
                    • Legal Information
                    • Modern Slavery Statement
                    • Privacy Policy
                    • Terms & Conditions
                    • Accreditations
                • Popular Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Recommended Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Get Your Heating Oil Quote
                • Contact your depot
        • Contact
              • You’re searching Region in Section

                  • Contact us

                    • Contact head office
                  • Our Depot locations

                    • Chester
                    • East Anglia
                    • Essex
                    • RixK9Fuels Gainsborough
                    • Grangemouth
                    • Oakleys Mercia
                    • Oakleys Midlands
                    • Montrose
                    • North East
                    • North Lincolnshire
                    • RixStones Malton
                    • Scotland
                    • South Lincolnshire
                    • Yorkshire & the Humber
                  • Find depot
                • Popular Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Recommended Pages

                  • About Rix
                  • Why us?
                  • FAQ’s
                  • Customer Reviews
                • Get Your Heating Oil Quote
                • Contact your depot
        • Get Your Heating Oil Quote
        • Get in touch
    • Search

      Search

      We found {results_count_total} results for {phrase}

      Generic filters
      Exact matches only
Viewing No Region Selected Reset
  • For home
  • News
  • Oil Market Report January 2016

Oil Market Report January 2016

 

February 1, 2016

< Back to our News

AdBlue Explained

November 12, 2018

Post by:

It says something about the current oil market that the conflagration between Saudi Arabia and Iran at the beginning of the year generated little more than a slight upward blip in prices. Ditto the muted market reaction to an apparent Hydrogen Bomb test carried out by North Korea. As recently as 2013, these kind of events would have sent prices sky-rocketing. But such is the current level of over-supply in the oil markets that prices only momentarily headed up, before continuing their relentless drive downwards. The only clear conclusion can be that – however bad things are in the world - geo-political concerns are very much playing second fiddle to the basic dynamics of supply and demand.

The current over supply situation has been well documented; fracked oil flooding US markets, OPEC refusing to cut production in an attempt to maintain market share and now, Iran’s bounteous harvest of oil (4th largest producer in the world) ready to overwhelm the market even further. But, at the same time, we now have a concurrent narrative around slackening demand. In the past, Portland has taken a fairly sanguine view of this supposed reduction in global oil demand - preferring to call it a slow-down in demand growth rather than an actual reduction in consumption. But now with China’s economy potentially going into (minor?) meltdown, can we be so confident that demand will hold up? The markets would seem to suggest not, with each new month heralding another unceremonious breach of a previously “agreed” minimum price for oil.

$50…$40….$30…Each price “floor” has been swept aside and we are now getting to the point where we might have to accept Goldman Sachs’ $20 per barrel prediction after all. In fact, the odds on even more outlandish predictions ($10 from Standard Chartered) are shortening by the day. Maybe we are heading back to the 1990’s, when crude prices largely stayed below $20 and dropped as low as $7 in 1997!

Well, probably not actually, because 2016 is certainly not 1997. Not least, the world has 1.5bn more people (!) to feed, heat and transport. And if demand is looking a little more patchy, it is still growing – and most definitely growing in China. OK, the Chinese Stock Market seems to be collapsing under the weight of its own unsustainable expectations (and may well be a harbinger of future economic problems), but this seems unlikely to affect current oil consumption. As evidence of this, January 2016 saw a record amount of oil imported into Chinese ports.

Plus 6% GDP growth in China means that they will “only” create an economy the size of Poland over the next 12 months! Then there are the actions of China’s Oil Stocking Agency to take into consideration. This Government body is busily seizing the moment and buying as much low-priced oil as possible and has already acknowledged its desire to increase the national stock holding to 90 days of reserves (in line with countries in the EU and IEA = International Energy Agency). Although accurate data is difficult to come by, most estimates put current Chinese stock reserves at between 20 and 30 days, which leaves 65 “days” of oil to purchase. Based on a daily consumption of circa 1.5bn litres, that’s 100bn litres of incremental demand making its way to China.

There is also a credible supply related argument against prices hitting $20 (or if they do, not staying there for very long) and this concerns the nature of crude oil pricing. When we talk about “crude” being at $20 a barrel, what we are really referring to is the benchmark crudes of Brent and WTI (West Texas Intermediate). But these marker grades make up only a small percentage of the oil sold around the world, with the vast majority of crude being sold at a discount to these two grades. So for example, “$20 a barrel” would in fact mean around $15 (ie, a $5 per barrel discount) for oil from fracking wells - such is the tricky, truck-based logistics required to deliver that type of land-locked oil to US refineries. And Heaven forbid you are producing sour crudes from Alberta, where the quality give-away is huge (lower quality crude means refineries have to work harder to process it into cleaner, refined products). Forget Goldman Sachs and $20 - some of the heavier, bitumen based Canadian crudes are already discounting at up to $18, which means the actual price is already below $10 per barrel…ouch!

Such rock bottom prices are of course not sustainable and the sands of time must be running out for oil producers at these low value levels. Put simply, something has to give. Whether it will be OPEC introducing strict production quotas or perhaps independent oil producers being able to hang on no longer. Or maybe oil buyers will conclude that demand is not so weak after all. One way or another, these super low oil prices will not last and a level around the $40-$50 mark seems likely by the end of this year, so we suggest you stock up on heating oil today.

To take advantage of the current low prices, get a free instant Heating Oil quote now.

Related Products & Services

Heating Oil
Rix have been keeping homes warm for over 85 years. Delivered direct to your tank.
Find out more
K+ Heating Oil
Fuel your home the energy efficient way with our premium heating oil.
Find out more
Aga Cooker Fuel
Ensure your oil-fired cooker is up to the challenge with our Aga cooker fuel.
Find out more

Related News Posts

Industry Updates, Local Community News
gainsbrough
Rix Petroleum acquires Gainsborough-based fuel supplier
Rix Linconshire
Industry Updates, Local Community News
gainsbrough
Rix Petroleum agrees year-long partnership with Lincolnshire and Nottinghamshire Air Ambulance
Get a quick quote
Heating oil at the best prices
0800 542 4207
Mon-Fri: 08-30 - 17:30
* Please see your
local depot for details
Request callback
Fill out our quick form and we'll call you back
        • About Rix

          • Site Map
          • Our Companies
          • Family owned business
          • CSR Policy
          • Careers
          • FAQs
          • Blog
          • News Landing
          • Customer Reviews
          • Oil Price and Availability Update
        • Home

          • Heating Oil Price Guide
          • Heating Oil
          • Premium Heating Oil
          • AGA Cooker Fuel
          • Heating Oil Fuel Tanks
          • Heating Services
          • Oil Boiler Insurance
          • My Account
        • Agriculture

          • Gas Oil
          • Gas Oil +
          • Diesel
          • SuperHeat 35
          • AdBlue
          • Lubricants
          • Fuel Tanks
        • Commercial

          • Gas Oil
          • Gas Oil +
          • Diesel
          • SuperHeat 35
          • AdBlue
          • Fuel Tanks
          • National Accounts
        • Legal & Privacy

          • Legal Information
          • Terms & Conditions
          • Privacy Policy
          • Complaints
          • Accreditations
          • Downloads
          • Cookies
          • Cookie Settings
          • Marketing Preferences
          • Modern Slavery Statement

connect with us:

Part ofJ R Rix Logo

Sage Pay
Cyber Essentials

Registered office: Two Humber Quays, Wellington Street West, Hull, HU1 2BN

We use cookies to deliver the website’s basic functionality in a secure manor and analytics cookies to count visits/traffic sources to improve the performance of our site. We share info about the use of our site with our social media, advertising and analytics partners. By selecting the “ACCEPT ALL” option, you consent to the use of the above cookies. To personalise your settings, please select the options below and select “ACCEPT CHOICES”.
REJECTALLOW CHOICESACCEPT ALLCookie settings
Cookie Settings

Privacy Overview

We use cookies to deliver the website’s basic functionality in a secure manor and analytics cookies to count visits/traffic sources to improve the performance of our site. We share info about the use of our site with our social media, advertising and analytics partners. By selecting the “ACCEPT ALL” option, you consent to the use of the above cookies. To personalise your settings, please select the options below and select “ALLOW CHOICES”.

The last two cookie categories are optional and can be switched on or off using the Manage settings option below.

If you are OK with cookies, then simply select the ‘Accept All’ button.

To find out more read our cookie policy here.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Performance
We use cookies to monitor user activity on our website so we can understand just how people use the site. These valuable insights allow us to see where improvements can be made so we can develop and improve the website going forward.
Marketing
Marketing cookies help us decide which of our products, services and offers may be relevant for you. We may use this data to tailor the marketing and ads you see on other websites and mobile apps, including social media.