There is no crystal ball when it comes to determining what the price of heating oil will be 2014 but given heating oil prices are largely determined by the cost of crude oil, there are some factors affecting oil prices in 2014 that will have an impact. These include:
Factors That May Depress the Price of Oil in 2014
US Oil Production: The introduction of fracking in the US has meant US oil production has been boosted by an estimated 2-3 million barrels per day. This, along with increased production in other non OPEC countries such as Canada and Brazil has already had a dampening effect on oil prices by reducing the influence of OPEC and ensuring higher levels of supply. It is expected that US oil production will continue to increase next year thus helping to control oil prices.
Political Issues: The US debt ceiling crisis may have been temporarily solved but it will drag on into 2014 as another decision on raising the debt ceiling will need to be made in February. This could lead to uncertainty as the new deadline approaches which could depress prices due to fears of recession. Additionally, oil prices have been boosted through 2013 by the continuing fiscal stimulus in the US. It is highly likely that the Federal Reserve will start to taper off the stimulus in 2014 which could lead to an increase in the value of the dollar and hence a decrease in the price of oil.
Middle East Unrest: 2013 saw spikes in oil prices due to unrest in Egypt and escalating tensions over Syria. However, as we approach the end of 2013 and move into 2014, the situation in these two areas is looking calmer and oil prices have fallen back as a result. Add to this the apparent thawing of relations between the US and Iran and oil production levels in Libya now picking up after protests over the summer of 2013, could mean oil prices in 2014 are not subject to uncertainty caused by unrest in this important oil producing area of the world.
Factors That May Increase the Price of Oil in 2014:
World Economies: Had this article been written back in early 2013, world economies may well have been a factor depressing the price of oil. However, in recent months the world economic outlook has improved slightly with positive news from China, Europe and the US indicating GDP growth is expected to increase in 2014. Economic growth inevitably leads to an increase in demand for oil which leads to an increase in prices.
Other Factors that Could Affect the Price of Oil in 2014
Production Issues: Problems with oil extraction and refining facilities can increase oil prices but how these will affect prices in 2014 is difficult to predict. There were unplanned maintenance overruns and political unrest in Libya that affected production in 2013, neither of which were predicted.
Weather: The weather has a particularly strong influence of heating oil prices and the long cold spring in 2013 certainly kept prices in the UK higher for longer. The difficulty of predicting the weather for winter 2013/2014 means that this is an unknown factor. Obviously, if it turns out to be colder than normal, heating oil prices will inevitably rise as demand rises.
Local Factors: Local heating oil prices can be affected by not only the weather. If there is a particularly competitive market in one area this can drive down costs. Additionally, local issues with supply due to disruption at local depots can cause prices to increase. The remoteness of your location will also affect how much you pay.
What Will Happen in 2014?
At the time of writing the general consensus appears to be that oil prices in 2014 should remain at similar if not slightly lower levels than late 2013 but, as history has taught us, with so many variable, prices are hard to predict as we never quite know what is round the corner.
More information about factors affecting oil prices in 2014
To keep track of heating oil prices in the UK, view the BoilerJuice heating oil prices chart here.
The EIA (the US Energy Information Administration) guide to factors affecting oil prices: http://www.eia.gov/finance/markets/reports_presentations/eia_what_drives_crude_oil_prices.pdf