The Organization of the Petroleum Exporting Countries, or OPEC, are scheduled to meet on 30th November 2016 for crunch talks. The topic? Discuss cutting the output of crude oil. Will the 14 OPEC member countries agree?
In today’s blog we look into the possible outcomes of the Vienna meeting and, most importantly for us, what impact it will have on heating oil. Before we start though, here is OPEC’s logo in case you haven’t seen it:
The story so far
Volatile. That’s just one word to describe crude oil prices in 2016. Regular OPEC meetings between the world oil superpowers have led to significant speculation, causing global crude oil prices to rise and fall with each comment or announcement.
While OPEC have been trying to agree reductions in output, up until now one of the major roadblocks to cuts being agreed was Iran. Having had international sanctions lifted in July 2015, Iran are keen to actually increase output, previously scuppering any potential deal.
Now the latest news points towards Iran being given an exemption to the cut, making an OPEC agreement much more likely. Rather than a cut, Iran would face a production cap, therefore enabling them to increase their market share.
The cut aims to decrease production of oil enough to be in line with global consumption which, in theory, would prop up the market and increase prices. If the deal passes and prices do increase we expect to see UK heating oil prices follow.
However, it should be noted the U.S. commercial crude oil inventories are forecast to have risen for a fourth consecutive week, which could slow a price rise.
How do crude oil trends impact heating oil?
Looking at crude oil price trends over the past 10 years, we found a 91% chance that the price of heating oil will follow the same trend as crude. So the more we know about crude prices, the more we know about heating oil prices.
We don’t know whether OPEC will come to an agreement at this meeting, but one thing is for sure: we’ll be watching with keen interest to know the outcome of this meeting and bring any news to BoilerJuice customers as soon as we can.
And to be on the safe side why not get a quote now?
Think the OPEC meeting might increase heating oil prices?
To be on the safe side, why not get a quote now?