Heating oil prices in the UK are subject to a variety of external factors such as:
- The weather.
- The economic climate both in the UK and worldwide.
- Demand e.g. people use more heating oil in the winter and hence prices rise.
- War and unrest in oil producing countries.
- Refinery maintenance and capacity issues.
- OPEC controlling supply.
So, whilst it is possible to say generally that heating oil prices drop in the summer, other factors come into play that may cause a sudden spike or drop in prices.
A classic example of this can be seen on the heating oil prices chart below which shows a plot of average heating oil prices for 1000 litres of heating oil from BoilerJuice participating suppliers during August 2012 through to August 2013. Whilst there was the expected peak in prices around the end of December 2012, there was a second peak in late March 2013 as winter was colder than expected and lasted a lot longer than usual.
An example of where unrest has had an impact can be seen in the small spike in heating oil prices in late June/ early July 2013 when the military overthrew the government in Egypt. Since Egypt controls one of the major oil pipelines in the middle east and access to the Suez canal, which large quantities of oil are transported through, the potential threat of disruption to supply caused an increase in prices.
Since July 2013, the prices haven’t dropped back to where they were in June as other factors such as improving economic data coming from China, Europe and the US has indicated increasing demand. Also, during this time, Libya has suffered from a drop in production and exports as a result of strikes at refineries and ports.
The good news is that heating oil prices in August 2013 are actually lower than they were at the same period last year. How long that will remain the case however is uncertain given the increasing unrest in Egypt.
Keeping an eye on heating oil prices is a good way to monitor trends and help you identify the best time to buy.