Predicting upcoming patterns in domestic heating oil prices is a notoriously challenging task. This difficulty is currently being compounded by various global geopolitical factors and a general oil market which is, to say the least, unstable.
There is currently little consensus among market analysts, who point out that recent increases in oil prices have tended to be temporary. Some commentators remain convinced that many of the factors which caused the depression in oil prices have been or are in the process of being corrected. For example, oil-producing countries such as the United States are beginning to address the problem of overproduction. They also point to economic indicators elsewhere and to the prediction of agencies such as the American Energy Information Administration that oil is set for a dramatic upturn in both industrial and domestic demand. This combination of factors, they say, heralds a certain increase in oil prices and consequently domestic heating oil prices.
Other analysts take a more sanguine position. They cautiously admit that oil prices are on a broadly upward trajectory but say that they remain hugely vulnerable to external factors. The recent tropical hurricane, for example, had a greater impact than usual on prices. Likewise, recent research shows that the process of reversing overproduction is, at best, happening on slow and uneven basis. There remains a significant supply surplus of oil in key oil-producing countries. For example, the latest statistics suggest that over two million surplus barrels are being produced every day. There is also some doubt about the credibility of the predictions of an upturn in industrial and domestic demand. Contagion from a weakening Chinese economy, say some, could see industrial demand decline, while the factors informing domestic demand, such as sustained inclement weather, are hardly reliable.
To the extent that there is an area of agreement on oil price patterns in the coming months, it is that the market has probably reached its lowest point and that prices will rise. There is no real certainty, however, about how fast or how steeply prices will rise, or whether it will be a sustained rise or subject to peaks and troughs.
This uncertainty, of course, affects domestic heating oil and can make it difficult for the consumer to plan budgets and requirements. Staying informed and keeping up to date is the best way to arm oneself against price fluctuations.
You can contact us if you need more information or if you want to take advantage of the current low prices for domestic heating oil.