O I L P RICE O U T LO OK FON interviewed Brian Milne, DTN
Refined Fuels Editor and Peter Beutel, president and chief editor of Cameron Hanover, Energy Risk Management Services for their perspectives on oil prices this winter. In general, they expect prices to stay fairly close to $3 per gallon with perhaps a dime leeway in either direction. Neither expects a serious drop or run up in price, though Milne sees either possibil- ity with the right set of factors. "Right now we have some pretty strong
resistance around $3.10 and that will likely hold for a while," said Milne. "And I would say we will likely move back down below three dollars into the $2.90 or $2.80 area, but I do not think it will last that long because we are going to be moving into the heating season." Milne noted there is ample supply,
but also a slight uptick in diesel demand correlated with GDP. "If you add that (increased demand) to the heating sea- son, you are likely looking at an upward movement through the fourth quarter of 2011 and into the first quarter of 2012 and at that point the weather will come into play," he said. "And if we have a moderate winter we could see prices peak in January and then start declining." Beutel generally agrees. "At this point
I don't see any real reason for heat- ing oil prices to get a lot stronger unless something amazingly bad happens or something amazingly good like the recov- ery of the economy," he said. "There a lot of reasons for them to get weaker, but they don't. The market never seems to be able to drop more than 10 cents at a clip. There are plenty of days when I think it should drop 20 or 30 or 40 or 50 cents, but any time it drops 20 cents it rallies at least 10 cents back right away. At this point I don't think prices are going to be much differ- ent. I think they're going to slowly move lower into March." Although this article goes to press
before the U.S. Energy Information Administration has began its heating season updates and outlooks focused on heating oil and propane, the EIA expects that on-highway diesel fuel retail prices,
www.fueloilnews.com | FUEL OIL NEWS | OCTOBER 2011 17
which averaged $2.99 per gallon in 2010, will average $3.85 per gallon in 2011 and $3.87 per gallon in 2012. Projected U.S. refinery diesel fuel margins increase from an average of $0.38 per gallon in 2010 to $0.65 per gallon in 2011, then fall to an average of $0.58 per gallon in 2012.
FON will provide a synopsis of the for-
mal EIA heating season updates when they are released. In some better news for oil and pro-
pane dealers, the EIA's latest Short Term Outlook noted that the Henry Hub spot price for natural gas averaged $4.05 per
