Heating oil prices traditionally tend to be lower in the summer than the winter due to the laws of economics and supply and demand. Although we can never be sure when UK weather is concerned, it is almost a certainty that demand for heating oil will be substantially higher in the UK during the cold winter months.
In the last week temperatures have been soaring throughout the UK, with many areas seeing temperatures hit 25oC – Andy Murray had to battle temperatures of almost 40oC courtside to win his first Wimbledon Final – that’s 104 Fahrenheit!
However, along with the high temperatures, heating oil prices rose almost 3 pence per litre – this amounts to an additional £30 on a 1,000 litre order. So what has triggered this unpredicted rise in the price of heating oil?
There has been further political unrest recently in Egypt with President Morsi being removed by what has been described by some as a military coup.
How does political unrest in Egypt translate to higher oil prices in the UK?
Egypt has control of the Suez Canal and the Suez-Mediterranean Pipeline, through which over 2 million barrels of oil a day were shipped from the Red Sea to Europe and North America in 2011. Egypt’s political upheaval continued to fan concern that unrest in the most populous Arab country may spread throughout the Middle East. The unrest in Egypt has caused traders and analysts to worry that supply through the Suez Canal and Suez-Mediterranean Pipeline could be disrupted and this has forced prices to quickly rise.
Last week a report indicated that UK Inflation rates fell which caused Sterling to substantially and instantly drop against the Dollar. In theory if inflation is low it means that the Bank of England can keep interest rates low for a longer period of time which means less confidence in investing in Sterling therefore causing the UK currency to weaken. On top of this, positive news coming out of US job markets have strengthened the US currency, and as Sterling dropped against the Dollar we saw oil prices trading significantly higher for the following 3 days.
Will heating oil prices come back down again?
Unfortunately we just can’t answer this question. Heating oil prices are unpredictable and the above are just the tip of the iceberg when it comes to factors which are affecting the price of oil. What we can tell you is that no matter where you are in the UK, you can rely on us for a safe, fast and courteous delivery service at some of the most competitive prices around.