The wholesale price for domestic heating oil changes every single day. In fact the price of all oil products show change throughout the stock market trading day at regular intervals. World oil prices are always affected by a number of key factors such as currency exchange rates, economic and political events and of course regional supply and demand for oil products.
There is little doubt market traders also influence swings in fuel prices as they attempt to predict the trends and rumours within the industry as they seek to make profit.
The UK heating oil industry, through its network of wholesalers and distributors, regularly adjust their selling prices. Some make intra-day or daily changes whilst others vary their prices less frequently.
The daily prices which are quoted by phone or on-line to domestic oil customers are generally reflective of the buying prices that each distributor pays for supply from their wholesale suppliers or major oil companies.
Other factors within the UK heating oil market
Heating oil distributors buy finished product from the oil refineries or key oil storage depots across the UK. The actual selling prices quoted by fuel oil distributors each day can also vary significantly depending upon the individual distributor’s buying contracts and associated terms.
The buying prices for oil distributors can vary extensively according to size of the distributor, strength of contractual supply positions and stock holding capacity at distributors’ depots.
Other factors such as logistical and operational considerations which can arise at times of severe weather can significantly impact the costs of delivering heating oil in each distributor’s area of business. For example, additional driver overtime in snow, travel delays lead to increased fuel usage, safety and environmental factors.
The reality is that, with the exception of very cold spells of weather, the UK market is oversupplied with distributors and stocking up on your fuel in advance of the cold winter weather is always advisable.
Basic economics dictate that when supply exceeds demand, then the margin is driven down. This is very evident with basic commodity products like home heating oil. Particularly in the current economic climate and the high base price, most buyers are extremely price conscious and they shop around.
In summary, what this means for domestic users is that, whilst there are good reasons for price variation in what is a very competitive market, it definitely pays to shop around.