2016 Heating Oil Price Review
It seems like just yesterday that I was writing the Heating Oil Price review for 2015 when prices were at just 30p per litre and still falling! Sadly this year I can't report such low Heating Oil Prices.
2016 has been quite a turbulent year for the oil industry; learn more about the changes in price and some of the reasons behind those changes in our 2016 Heating Oil Price Review.
What was the price change in 2016?
In January 2016 we saw heating oil prices as low as 25p per litre however by the end of the year prices had increased by an astonishing 75% to 45p per litre.
The price of crude oil also changed dramatically throughout 2016 with prices for Brent Crude reaching a low of just $27.88 per barrel in January. Changes to the market caused the price to increase $56 per barrel by the end of 2016.
How much did 500 litres of heating oil cost?
January 2016: 500 litres at 25p per litre = £125
December 2016: 500 litres at 45p per litre = £225
Why did the price change so much?
2016 was a politically charged year with major events affecting not only the UK but also the entire world. Two of the key political events that could be linked to price changes include; Brexit & the decision by OPEC to cut oil production.
How does Brexit affect heating oil price?
As we mentioned in our blog in July (The effect of Brexit on Heating Oil Prices) much of the UK’s supply of heating oil is bought from mainland Europe, the sharp fall in the value of the pound following Brexit meant UK suppliers paid more for the same volume of heating oil, a cost that unfortunately must be past on to customers. Depending on the agreements made in March of 2017 things could change further; keep an eye on our blog to learn more.
OPEC’s oil production cut
At the end of September 2016, for the first time in 8 years, OPEC (The Organization of the Petroleum Exporting Countries) announced that they would limit their production of oil. This announcement saw an immediate increase in price. When OPEC announced the exact details at the end of November there was a further increase in price.
The aim of the production cut was to increase the cost of oil and end the two-year slump in price. Production was last cut in 2008, 2001 & 1998. Following all of these cuts we saw sudden increases in price as can be seen in the graph to the right.
2017 Heating Oil Price Predictions
Whilst OPEC has limited production in the past, countries have exceeded their quota and have overproduced. If this begins to happen then we could see supply increase and prices fall. Another factor that could cause changes to the price of oil is the fact that the US are becoming more and more energy independent, i.e they’re becoming more self sufficient and are importing less oil. If this continues it will lower the demand for oil and could cause prices to decrease.
EU Trade Agreements
When Negotiations begin in March it’s possible that the strength of the pound will change and therefore we could see further changes to the price suppliers pay for heating oil, which could in turn affect the price you pay. Furthermore the actual trade agreements themselves could affect the deals that suppliers have in place at present. We’ll be keeping our eyes on anything that affects the price of heating oil and we’ll keep you informed, to keep up to date follow us on Facebook & Twitter.
Getting the best price in 2017
To ensure you’re getting the price in 2017 make sure you check our live heating oil price comparison graph.