It is great news for the average home owner in Northern Ireland as the price of home heating oil has dropped to an eight year low. This means substantial savings this Christmas in comparison to previous years.
Speaking to the Belfast Telegraph, price comparison website boss Michael Toner stated, "We would encourage people to take advantage of low pricing by stocking up and ordering in quantity - for example opting for 900 instead of 500 litres."... "Average customers, who use around 1,800 litres a year, could save over £500 annually if prices remain as low as they are now."
What is driving down the price?
The price of oil in the UK is usually affected by a number of factors; VAT, weather conditions, demand, distribution costs, refining costs, currency exchange rates, and geo political concerns all need to be taken into account.
The major factor that seems to be the main reason for this latest drop in price is the production of crude oil.
With oil having fallen by 70% in the past year, global production was expected to fall, but the sector's unexpected resilience was underlined when the US energy watchdog revealed an increase of 17 in the number of active rigs drilling for oil last week as reported in The Wall Street Journal.
Supplies are already at record levels and stockpiles in the US surged by 4.8 million barrels last week, at a time of year when reserves typically fall. As reported in The Guardian, “The slow reduction in US oil production was a surprise to many, said Rob Haworth, senior investment strategist at US Bank Wealth Management, one reason why prices are still down.”
This is combined with the unwillingness of OPEC (the Organization for Petroleum Exporting Countries) to intervene to stabilise markets that are widely viewed as oversupplied. Following the decision on 4 December by Opec to continue its strategy to seek market share rather than support prices, US crude oil values dropped to under $40 a barrel. That sent values to their lowest levels since December 2008.