U.S. residential heating oil prices at the start of the winter heating season are 28 percent lower than in the previous heating season due to lower crude oil prices and high inventories of distillates in the United States, the Energy Information Administration (EIA) said on Tuesday.
The 28-percent drop in heating oil prices at the start of the winter season is the biggest price decrease between the start of two seasons since October 2015, according to EIA’s Heating Oil and Propane Update (HOPU).
Distillate heating oil is the primary home heating fuel in 4.4 percent of U.S. homes and tends to be more common in the Northeast, according to the U.S. Census Bureau’s 2019 American Community Survey. More than half of the homes in Maine and at least 30 percent of the homes in New Hampshire, Vermont, Connecticut, and Alaska use heating oil as their primary heating fuel, according to data from the U.S. Census Bureau.
Due to high distillate inventories and lower crude oil prices this winter, the EIA expects U.S. households that use heating oil as their primary space heating fuel will spend $1,221 on average this winter, down by around 10 percent compared to the amount they spent during the 2019-2020 winter, according to EIA’s Winter Fuels Outlook published this month.
Before the start of the winter heating season, distillate stocks in the Northeast—the region where heating oil residential use is most common—totaled 48.5 million barrels at the end of September, 68 percent higher than the same time last year and 26 percent higher than the previous five-year average.
The EIA forecasts that distillate stocks will drop by more than normal this winter season with an overall recovery of distillate fuel consumption, while refiners will shift yields toward gasoline production because of low distillate fuel refining margins.