Slide 10 of 17
Because of the higher projected crude oil prices and because of increased tightening in the Northeast heating oil market since the last Outlook, we have raised expected peak prices this winter for residential heating oil deliveries to $1.55 per gallon (January) compared to $1.43 per gallon in last month’s projections. This is significantly above the monthly peak reached last winter. Because these figures are monthly averages, we expect some price movements for a few days to be above the values shown on the graph.
Primary distillate inventories in the United States failed to rise significantly in November despite some speculation that previous distributions into secondary and tertiary storage would back up burgeoning production and import volumes into primary storage that month. Average heating oil spreads were above expectations in November as well. Given an even lower-than-previously-expected track for distillate fuel (including heating oil) stocks this winter, we have boosted expected heating oil margins throughout the winter. The likelihood of total distillate stocks falling below 90 million barrels at the end of the season under normal weather conditions has risen, based on recent events.