Heating Oil Price, Domestic Heating Oil Prices, Kerosene
UK Heating Oil Market
As we enter winter 2014/ 2015, the good news for heating oil users is that heating oil prices have fallen to their lowest level in 4 years. Since March 2012, we have seen a significant decrease in heating oil prices, which have fallen from over 64 pence per litre to around 48 pence per litre – a difference of 25%!
The price you pay for your heating oil is influenced by a number of factors. Various factors have an impact on oil prices at international, national and regional levels and will all contribute to the price that you pay to heat your home.
Customers often ask us “When exactly is the right time to buy heating oil” as they have a keen interest in heating oil prices. Having some insider information may help you make significant savings if you are able to buy at the right time. Unfortunately, we can’t predict geopolitical issues which may crop up and raise prices as was the case in summer 2013, with unrest in the middle east, however, the following information should give you a good indication of how best to time your heating oil purchases. As the USA increase their efforts in fracking for shale oil and gas, this has had a stabilising effect on world energy prices and has played a large part in driving down the cost of heating oil in the UK.
Heating Oil Prices by UK Region
The graph below provides an illustration of heating oil price movements throughout various regions in the UK - you can compare your region against the UK average price and other regions of the UK from between 3 months - 2 years.
Simply tick the regions you wish to compare and select the time frame from the drop down list and click apply - the graph will then automatically update to display the relevant data.
Heating Oil Prices 2014
The UK average 'pence per litre' rate is displayed in the graph below. Although other energy sources such as gas and electricity have seen significant price increases recently, between March 2012 - October 2014, the UK average pence per litre for 1,000 litres of heating oil has dropped by over 15 pence per litre! As you can see in the graph below, the average price has decreased significantly since July 2014.
What factors affect the price of heating oil?
ValueOils.com monitors heating oil price movements on a daily basis and note the factors which often play a key role in influencing prices. Some of these can be predicted to a degree, while other geopolitical factors are often hard to predict. In July 2013 heating oil prices increased substantially due to unrest in Egypt and Syria - this went against the popular theory of UK consumers, that weather is the main (or only) influence on heating oil prices. Here are some of the key factors to consider when you buy heating oil:
Winter months are typically more expensive than the summer due to the rise in demand across Europe & North America. In contrast, the summer months of June and July will usually provide the lowest rates, but not necessarily (as we mention above)
As the temperature drops and weather conditions worsen, the demand for oil will increase as customers will turn their heating on for longer periods. Extreme weather or unseasonal or freak weather can also significantly influence the logistical costs of distribution for oil companies. This will normally only affect prices at a local level and only in the short term.
Falls into 3 categories which can all influence heating oil prices:
The global supply of kerosene and the price of crude oil will impact on the price of heating oil. If there is a global production decrease or shortage in supply and the level of demand remains consistent, the price in the UK is likely to increase. Geopolitical factors or civil unrest in OPEC countries or neighbouring countries often lead to concerns over supply and result in price increases. Decreases also follow when political circumstances settle down and production resumes. Recent examples include Libya and previously the war in Iraq which both witnessed price spikes and drops.
The national supply and demand for kerosene will impact the price. If there is a regional issue hindering supply e.g. weather conditions, the price can temporarily rise. At a local level, the price can vary depending upon the number of suppliers concentrated in the area and their access to wholesale stock or indeed how effectively they purchase their fuel oil on contract. In addition, kerosene which is used widely in the UK for heating oil, is also virtually the same product used to fuel aircraft. Therefore if the air travel industry is buoyant, demand for kerosene remains high. Similarly, kerosene is used in producing ultra-low sulphur diesel and again when demand for ULSD is high, this impacts on kerosene demand.
Local supply prices are very interesting and will generally vary depending on where a distributor is located in relation to a refinery or major storage facilities. The cost of product collection either ex-rack from the terminal or in haulage to the distributor’s depot for storage and then the cost of delivery to your home will impact upon the price paid. Rural areas can often be slightly more expensive for fuel than urban areas, but not always. The current high cost of road diesel is impacting on the delivered price of product in 2014 Local supplier competition is always fiercest during the summer months when local demand collapses due to warm weather. This can be an ideal time to buy and to stock up for winter. Indeed, some more inaccessible places such as the Highland of Scotland can only receive deliveries during non-winter months and must buy fuel during summer. During the wet and stormy but relatively mild winter of 2014, prices actually fell in the UK. The fierce competition between local Northern Ireland Oil distributors actually drove end user prices lower than usual as they battled for market share. Similar local competition impacted the South East of England and the Midlands.
Currency Exchange Rates
As oil is traded in US Dollars, the exchange rate between US$ and UK£ can have a huge bearing on the final price that we pay locally in the UK. If the UK£ strengthens against the US$, generally oil becomes cheaper and the reverse is also true. As currencies are impacted by world economic and political events, data and news around the world quickly feeds into exchange rates and immediately impacts the price of oil and other commodities.
Distributor Stock Levels
The market prices fluctuate throughout each day, the price which a distributor is charging may change due to their purchasing contracts. Current stocks in tank, the price change on a given day and outstanding order commitments. These factors all impact the selling price that a local distributor can offer to customers. However, given the recent high price of oil, local distributors are no longer keen to hold large stocks due to cash flow and price volatility
In many parts of the UK, the quantity of fuel that you order for your oil tank will influence the pence per litre rate which you will pay. If a distributor is able to deliver a larger volume to your tank, typically the cost of delivery will be less. In various regions of the UK and in N.I., many oil distributors have now reduced the minimum delivery quantity to 300 litres. This is possible due to new electronic metering systems on modern road tankers.
Heating oil users across the UK find our regional price trend guide convenient for gauging the average price trends of heating oil throughout the year. We continue to monitor the average cost of 1000 litres each month and hopefully this will assist you in determining the right time to buy your fuel. You can also check out our blog and see the factors to consider when purchasing your oil in greater detail. Don't forget, having your boiler regularly serviced or using a fuel additive to ensure more efficient combustion in your boiler can also save you money on your fuel bills.
*All heating oil graphs are for indicative use only and intend to demonstrate price movement up or down in the regions shown. ValueOills.com Ltd accepts no liability as to the accuracy of the above information; it is intended for illustrative purposes only.