It was widely reported in the press before Christmas that heating oil prices had fallen to an eight-year low in Ulster, despite an upsurge in demand following the recent cold spell, which saw snow, ice and sub-zero temperatures throughout the province and elsewhere in the United Kingdom. The Belfast Telegraph reports that the average price of 900 litres of the fuel has been halved to roughly £250. Accompanied as it has been by a sharp fall in the price of petrol to under £1 per litre, this is welcome news for household finances. But what are the reasons for prices falling, and what are the views of market observers on how consumers should react?
Why Are Oil Prices Falling?
The volatility of the international oil market has been the subject of much analysis during the past year. There are several complex geopolitical factors at play, but the key issue is that production remains significantly higher than demand, pushing prices ever lower. Certain oil-producing countries have responded by attempting temporarily to curtail production, but the Organization of Petroleum Exporting Countries (OPEC) has been rigid in its determination to sustain high production levels in order to retain its market share. There are rumours of rifts emerging within OPEC about the sustainability of this approach, and some member countries are beginning to experience serious economic repercussions. Saudi Arabia, for example, is recording an alarming deficit. Despite this, there appears to be no immediate prospect of OPEC changing its course or of increased global demand for oil. Commentators believe that prices will either stabilise at current low prices or fall even further.
How Should Heating Oil Users React?
While prices are expected to remain low, there is, of course, no guarantee that this will happen: the landscape can change dramatically in a short period of time. This, and the fact that buying in bulk once or twice a year rather than in small quantities every month can help to contain delivery costs, seems to be the reason why experts are urging consumers to stock up now while prices are at record lows. January is forecast to be especially inclement, and stocking up can give you peace of mind.
At Value Oils, we watch oil prices closely and pass savings on to our customers. Check this site regularly for the latest news and for details of our competitive heating oil prices.