Heating oil prices continue to creep down

international market

The US and EU continue to discuss a price cap for Russian oil. While the debate among Europeans is still informal, the Americans already have clear ideas about the marginal cost. He should cancel the increase that occurred in the form of a risk premium as a result of the Ukraine war. However, it should not lead to damage to the Russian oil industry, which means that it is not designed as a punitive measure. Ideally, it promotes Russian interest in expanding oil production. Therefore, the price must exceed the production costs. These are estimated at $44 per barrel. From this, Washington derives a price limit of $60 per barrel.

Despite all the plausibility of the published number, the installation of a price cap remains an issue that is hardly enforceable. It would definitely require the cooperation of the major oil buyers. In fact, it would amount to an alliance with the United States. It would certainly be absurd for China, and India would probably not be ready for it either. Both countries currently store Russian oil cheaper than others. Even more serious than the allied issue, however, is the systemic uncertainty that would arise from the price intervention. In a simple cause-and-effect analysis, the proposal sounds expedient. But the market is not simple, it is complex. Good thinking often turns out to be poorly executed because it was created without sufficient impact analysis. The introduction of the price ceiling may well lead to a further price increase. This would e.g. be the case if Russia refused to supply oil to supporters of this measure. It would be like withdrawing oil from the market. A price explosion would be inevitable.

The oil market is in a state where any increase in scarcity has unpleasant consequences. They are currently not cost efficient, at best due to fears of a recession. They are menacing nonetheless.

We have seen an increase in shortages in Nigeria for some time. The OPEC member is far behind its financing options. The main reason for this is oil stolen by gang crime. It is tapped from the pipelines. This results not only in economic losses, but also in serious injuries and deaths. Oil workers are now loudly demonstrating against this gang crime. Their unions are calling on those in charge to ensure safety under threat of strikes. Managed alarmism has already pushed production to the lowest level since 2016. Strikes would worsen the situation.

Relations between Iran and the United States also remain unsatisfactory. It appears that there will be no additional Iranian oil for the official market because the necessary nuclear deal looks set to fail again. It is pointless to argue about causes or blame.

The oil exchanges are trading calmly this morning. The slats tilt sideways. This has been the case for gas oil (precursor to fuel oil) for a while. However, crude stocks have recently yielded again.

A barrel of WTI (West Texas Intermediate) is currently at $86.17 and a barrel of Brent at $92.35 prices rise traded. A ton of gas oil costs 1,078.25 dollars prices rise. The US dollar costs 0.9854 euros prices fall. So the euro costs $1.0145 prices rise. The arrows behind the numbers indicate the change from the start of the trade the previous day.

National market

Fuel oil prices have developed relatively well for just over two weeks, as can be seen from the current development in the price of fuel oil. Whether trend channels will change from rising to falling during the movement cannot be predicted. However, the fact is that the domestic market will remain under pressure in the long term due to high demand and low supply. The environment is not suitable for price collapses. From the problem areas in this country, low water levels on the streams, poorly available goods, insufficient fuel oil, there is at least some relief to report with regard to water levels and freight costs.

Orders for fuel oil are more reserved than in recent weeks. The reason is probably the reversed hope for significantly lower prices. Our heating oil Swarm-O-Meter, which compares customer purchases to their price inquiries, and the reader’s assessment of price trends shows the customer’s state of mind accordingly. One is at an intermediate level this morning for buying intensity, the other at a clear majority value for the expectation of falling fuel oil prices.

Our sentence for all undecided is: If you need heating oil, you should buy preventively. The tank does not need to be completely full.

Clarification: For some time we have noticed misunderstandings in public opinion about the future of oil firing. Therefore, we would like to draw attention to it Heating with oil is not prohibited by the legislature, neither now nor in the future and not from 2026. From , new oil-fired plants must only be equipped with a regenerative component, for example with solar collectors for heating domestic water. More info.

In addition, more than ever, we are of the opinion that we must all develop consumption-reducing measures and behavior in order to be in shape for the future.

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