Current market for heating oil: oil prices with a clear setback

06/20/2022, 08:41 by Josef Weichslberger

Oil prices on the international commodity futures markets came under severe pressure during final trading on Friday and are starting the new trading week at a significantly lower level. As a result, heating oil prices in this country are also expected to decline significantly.

August contracts for European North Sea “Brent” oil are currently at $ 113.70 per barrel, a barrel of US “West Texas Intermediate” oil currently costs $ 109.90 per hour. The euro has changed little against the US dollar and is still trading around $ 1.0525 this morning.

The Western world’s conflict with Russia is entering a new round. For the past few days, much less Russian gas has been arriving in Germany, Italy and Slovenia than usual, while in France it is not arriving at all. Although the Russian company Gazprom justifies this with repair work, hardly anyone believes it.
As a result, gas prices have exploded again and this unfortunately also affects the oil market. Here, too, the supply situation is known to be very tense, especially as regards diesel fuel, an untaxed precursor to heating oil and diesel. While crude oil prices, which are traded on the international commodity futures markets for the global market, have recently fallen significantly, diesel futures have only fallen very hesitantly. Many power plant operators are switching fuel and switching from gas to diesel, which is putting a strain on the market here.
At the same time, due to the Coronavirus and political decisions, China reduced its refinery capacity by around a third and cut its petroleum product exports by around 40% in the first five months of the year.
Unfortunately, the news that oil exports from Libya are expected to resume and that Russia intends to significantly increase oil production in June is only about crude oil contracts.
But there are certainly also price pressures. Above all, the current slowdown in the global economy is likely to depress global demand for oil. Furthermore, oil production in the United States is again slowly but steadily increasing. According to Baker Hughes’ latest report last week, the number of active rigs here increased by a further 4 units to 584 units.

On the foreign exchange market, the euro initially fell significantly against the US dollar on Friday. After rather weak economic data from the US, our common currency managed to recover and is still rising this morning.

Overall, very good conditions for the German domestic market, where heating oil prices are falling significantly today, but unfortunately not to the extent that the drop in crude oil prices would suggest at first glance due to the circumstances described above. According to current calculations and initial price trends, discounts will average one to two cents per liter. Overall, prices remain very high and the prospects for a sustained decline are weak. Unfortunately, the current very weak demand does not reduce the risk that diesel prices may continue to rise in the fall!

Other market reports

Friday, 06/17/2022, 08:25

Oil prices fell only briefly yesterday, with Brent futures returning to $ 120 by close. Despite a slight currency increase, heating oil prices continue to rise to their highest level since the beginning of March.

Wednesday, 06/15/2022, 08:21

Oil prices initially rose sharply yesterday. However, futures fell again in late trading, but diesel prices did not. Therefore, there are no major discounts on diesel prices today.

About the author


Leave a Comment