A friend has also been quoted 18p/litre. Unfortunately he recently filled up at 31p/litre, which he thought was a bargain - well I guess it was at the time!
I innocently suggested it might be worth buying another tank at these low prices, which turned out to rub salt into the wound when he explained he had got rid of a spare 2000 litre tank some years ago. Still, who knew the world would go mad? :roll:
I don't know where heating oil sits in the "value chain" but it has to be made if the other products are being made as 1 barrel of crude gets split /distilled / refined into varying ratios of different products. The ratio is as I understand it fairly fixed due to the chemical makeup of each type of crude oil and the refinery processes used.
So if they NEED to make loads of jet fuel (maybe a bad example...) then refining the barrel will also give them say 1/10th of a barrel of ashphalt, 1/10th barrel of diesel, 1/10th of petrol, 1/10th of heating oil etc - I don't think you can make one without the others as the crude is split into its constituents - and all of this needs to be sold as there is only finite storage available.
The logical outcome is that refineries will refine the lowest amount of crude needed to give them the output of the product that they need the most of - all of the other products come as a happy by-product and need to go somewhere. If the end result is that they need to refine loads of oil to produce the jet fuel in my example, either the cost of jet fuel will skyrocket or the cost of the other bits will drop in order to find buys and get rid of them.
So in theory if there is a massive oversupply of heating oil as a side-effect of the crude being refined to produce another essential product, there is no true floor price , you may be even paid to take it away (but this probably won't happen)
Or if heating oil is the biggest demand from crude (due to a drop in demand for Jet fuel, petrol, diesel etc) then the cost will rocket as the other products will have to be made and sold at a lower price just to allow the heating oil to be produced.
eventually an equilibrium will be found but no idea when. messy
The other thing to consider is that jet engine fuel is exactly the same stuff as domestic heating oil.
So with so many jet planes going nowhere at the moment, it directly increases the glut of heating oil.
Trading - For physical oil storage is running out so prices are dropping for delivery. May oil went to $50 negative ie you paid to have oil for delivery in May not delivered. This is largely traded oil impacting traders only ie speculating on thousands of barrels.
Real world - The real world price has dropped like a brick due to lac of demand Air travel, Petrol, industry. This has knocked onto heating oil. As said above when you split oil you get multiple components, so whilst demand for heating oil hasnt changed much the price of the barrel has.
My bet is we have seen the bottom, as lockdowns ease. Fill your boots I say, we are!!
Goff petroleum are allowing you to buy oil in advance. Sounds good but the delivery has to be made before end of October and they charge you £30 to store it.
Okay if your tank might be empty come end of October but I bet many will not as most people have filled up at todays prices like I have , my tank is brim full
of 18.3p a litre oil