U.S. oil prices recently fell to a six-year low, according to the Wall Street Journal, and heating oil customers are likely to benefit with lower heating costs.
“Oil, in tumult for more than a year, continued a summer swoon that took it below the lows it plumbed this spring,” The Journal wrote. “Production is still near historic highs in both the U.S. and the Organization of the Petroleum Exporting Countries, new data show. It indicates suppliers around the world are still mired in a fight for customers that ramped up output and took down prices nearly 60 percent from the highs of 2014.”
Meanwhile, the U.S. Energy Information Administration (EIA) published its Short-Term Energy Outlook this week that predicted retail heating oil prices of well under $3 per gallon through 2016. EIA projects that retail customers will pay $2.49 a gallon in the third quarter of 2015 and $2.55 in the fourth quarter. In the first two quarters of 2016, prices are projected at $2.62 and $2.61, respectively. For the same four quarters in 2014-2015, heating oil prices averaged about $3.16. If the EIA projections bear out, the cost of heating oil will decrease by 19 percent this winter, compared to the winter of 2014-15.
Oil prices are facing more downward pressure from China, which devalued its currency and has a struggling economy, according to The Journal. “Overall it continues to suggest that the main oil growth engine of the world is not going to come to the rescue of the oversupplied global oil market anytime soon,” analyst Dominick Chirichella, of the Energy Management Institute, told The Journal.
The price of light, sweet crude for September delivery settled at $43.08 a barrel on the New York Mercantile Exchange – the lowest settlement since March 11, 2009. The EIA on Tuesday lowered its price forecast for both U.S. and global spot oil prices by about 10 percent. Oil prices plunged into a bear market last month and are off more than 50 percent from last year, the article states. The Journal called the situation a “global oversupply of oil” that will not abate in the near future.
To read the Wall Street Journal article, click here.