We’ve had a few people querying our opinion on whether the price of heating oil is set to rise. January is generally thought of to be one of the cheaper months to buy heating oil but unfortunately this isn’t the case for several reasons that we’ll get onto. Truthfully, it’s very hard to predict the price of oil due to the turbulent nature of today’s markets, few expected the prices to dip so suddenly in late 2015 and even fewer expected them to bounce back so quickly too! So why has this happened?
• Weak currency – Oil being traded in US Dollars means that a stronger pound = cheaper heating oil. The EU referendum and other geopolitical events had a detrimental effect on the exchange rate. For example; in December 2015 1 GBP = 1.4742 USD and currently it trades at 1GBP = 1.24. And unfortunately, financial forecasts predict that the only way is down for the pound.
• Organisation of Petroleum Exporting Countries (OPEC). Give OPEC a quick Google and you’ll see they’ve been having a few meetings (September and November) were they have agreed to halt oil production. Russia (who aren’t in OPEC) have also agreed to it. Prices have already shot up as a result; and unfortunately, we, and many others, predict that there it is only going to get worse. We won’t actually feel the effects of this until mid-January 2017 which will put the prices up. However, OPEC nations notoriously don’t get along with each other, so there is still a chance that they could fall out and make the price take a nosedive – we’re holding out for that!
• Politics and current affairs – Where do we start? Brexit, Trump, Middle East in general, turbulence in politics creates an unsteady and uncertain market which leads to price fluctuations. Keeping it simplistic on this one!
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