The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
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FUELS EIA N E W S 14 DECEMBER 2015 | FUEL OIL NEWS | www.fueloilnews.com Global distillate market factors can also affect New York Harbor ULSD spot prices because of PADD 1's reliance on distillate imports to meet demand, par- ticularly during the U.S. winter season. In recent years, two refineries in Saudi Arabia were constructed that maximize distillate output, and the expanded Ruwais refinery in the United Arab Emirates began to export distillate in 2015. This year, however, because of weaker global economic growth and increased refinery runs, the global mar- ket became well supplied with distillate. Trade press reports indicate distillate inventories in Europe and Asia this year have reached the highest level in several years, depressing global distillate prices. EIA: Heating Oil Expenditures Forecast To Be Lower This Winter A forecast combination of warmer weather and lower crude oil prices is con- tributing to the lowest expected average residential heating oil expenditures in nine years for the winter heating season of 2015-16, which runs from October 1 through March 31. The average house- hold using heating oil is forecast to spend about $1,390 for heating bills during win- ter 2015-16, down $460 from last winter's average expenditures. Forecast average expenditures provide a broad guide to changes compared with previous winter heating seasons, but fuel expenditures for each household are highly dependent on the size and efficiency of individual homes and their heating equipment, thermostat settings, and local weather conditions. Heating oil is a winter fuel mainly used in the northeastern United States, where 23% of that region's households use it as a primary space-heating fuel. Nationally, it is less widely used, with only 5% of households using it as their primary source of heat. Prices for residential heating oil are forecast to average $2.57/gallon (gal) this winter, which would be 47 cents/ gal (15%) less than last winter. The main driver of lower retail heating oil prices is lower crude oil prices. The spot price of North Sea Brent crude oil is forecast to average $52/barrel (b) this winter, down $13/b (32 cents/gal) from last winter. In the forecast, Brent prices remain at levels below recent years, as the global oil market continues to experience large inventory builds because of more supply than demand. C o n s u m p t i o n o f h e a t i n g o i l i s largely dependent on winter tem- peratures, which are forecast by the National Oceanic and Atmospheric Administration to be relatively mild this winter. Consequently, heating oil use is forecast to be 11% lower than last winter. Also, distillate fuel inventories, both globally and in the Northeast, are ample heading into the winter. Slowing eco- nomic growth in emerging economies, which has been the major driver of dis- tillate consumption in recent years, has reduced growth in global demand for distillate fuel. Additionally, relatively strong gasoline refining margins during the past summer encouraged record-high global refinery runs. This combination of high refinery runs and slowing demand growth has resulted in high inventory lev- els in major distillate markets including Asia, northwest Europe, and the north- east United States. Distillate stocks in the Northeast totaled 45.1 million barrels on September 25, the highest for any week since late 2011. Higher levels of distillate supply compared with demand contrib- ute to expected heating oil crack spreads averaging 38 cents/gal this winter, down from an average of 43 cents/gal over the previous three winters. Although average expenditures for heating oil customers are expected to be lower this year, actual expenditures could deviate significantly from forecast Excerpted from This Week in Petroleum- Oct. 7, 2015