When crude oil prices briefly topped the $50 per barrel mark in the first week of October, some of the so-called experts started hollering, “I told you so!” These are the folks who kept telling us that low heating oil prices could not last much longer, and that we could expect them to start a fast upward climb again.
Well, that didn’t happen! This was just a temporary blip in the marketplace, which was attributed to three main factors:
a small decline in monthly U.S. oil production
a slight weakening of the U.S dollar
a new concern in the Middle East–Russia’s intervention in Syria
What did we think about this?
We stayed calm and kept carrying on. We’ve been at this business since 1904 and we know from more than a century of experience that there is no need to panic over the normal daily ups and downs in the energy markets.
We also know that it’s always wise to look at the big picture. Right now, that picture contains a lot of positive signs for the future of heating oil and propane prices.
Heating oil prices remain at their lowest level since 2009.
U.S. oil production has reached its highest point in 43 years, leading many analysts to predict that oil prices will stay lower for the foreseeable future.
U.S. inventories of propane have reached their highest level in the 22 years that the U.S. Energy Department have been collecting this data; an abundant supply bodes well for residential propane prices.
Crude oil prices have once again dipped under the $50 per barrel mark and since the summer of 2014 have fallen about 50% from their $100-plus per barrel levels.
The average wholesale heating oil price stood at about $1 less per gallon than at this time a year ago; wholesale propane prices were about 50 cents per gallon lower than mid-October 2014, according to the U.S. Energy Dept.
U.S. household expenditures for heating oil this winter are projected to be 25% lower than last winter; propane expenditures should be 18% lower. That’s due to a forecast of both lower fuel prices and lower heating demand.*
The National Oceanic and Atmospheric Administration forecasts overall heating degree days this winter will be 7% lower than last winter and below the 10-year average.
*Source: Short-Term Energy and Winter Fuels Outlook, U.S. Energy Information Administration, 10/6/15
