Prospects are low for heating oil
The sale of heating oil will start next Thursday, October 15, at the low average rate of 0.78 euros per liter, as things stand. However, the market anticipates demand to remain minimal for the first three months, which is very negative given that it was heating oil that kept fuel trading going during the spring lockdown, when gasoline and diesel saw demand flag.
The reason heating oil is not expected to trade well – despite its low price – is that many consumers procured the commodity in large quantities back in spring, when the government extended its sale period up to the end of May with a reduced consumption tax. The 2019-20 season ended with an average price of €0.80/lt.
At least up to Christmas, demand is projected to drop by 75%, which is set to hurt the entire supply chain. This will come after the 16% fall in gasoline trading in the first eight months of the year, as after the lockdown there was also the economic contraction of the first half of the year and the major drop in tourism. Diesel suffered an 11.3% annual decline at the same time, as trucks kept moving more or less normally.
