Heating Oil Prices

Exchange Rates

Countries buy and sell crude oil in US Dollars. Therefore, the strength of any currency against the dollar can affect the price of heating oil. For example, if the pound strengthened against the dollar, oil prices would likely fall in the UK because the pound could buy more oil at the same price.

Economic Performance

Global economic growth impacts the demand for crude oil and its products. After the 2008 global recession, consumer and commercial spending fell and as a result so did oil prices. Why? The lower demand for oil drove prices down.

OPEC

OPEC, or, the Organisation of the Petroleum Exporting Countries, is an organisation involving 14 of the largest oil producing nations in the world. Controlling most the world’s oil gives OPEC the opportunity to restrict, or relax, their production to influence the overall market price. As a result, they can “maintain stable oil prices for producers”. Often, however, the fourteen member countries act to keep prices artificially high.

Conflict

War and conflict in key oil supplying nations restrict their ability to export crude oil. Even, if a war-torn country can keep exporting, they require greater security on oilfields, refineries and shipments and this all comes at a cost to both producers and consumers.

Trade Deals / Sanctions

Trade deals and sanctions have the potential to affect the global supply of crude oil. Latterly, prices have fallen because of faltering trade talks between the US and China. In fact, many fear that without a trade deal, the global economy will begin to struggle, thereby, suppressing demand for oil. In contrast, Venezuela, a country which possesses the largest known oil reserves, is facing trade sanctions from America resulting in price increases as supply has falls.

Weather

It should come as no surprise that during periods of cold weather, the demand for heating oil skyrockets. In days gone by, these seasonal trends had a big bearing on the price of heating oil. However, in today’s economy, market prices are becoming less dictated by the weather and, instead, are dominated by the factors discussed above.