Late January Cold Impacted Both Supply & Demand
- A brief cold spell occurred in the second half of January on top of the low stocks. Cold weather increases demand, but it also can interfere with supply, as happened this past January.
- During the week ending January 22, temperatures in the New England and the Mid-Atlantic areas shifted from being15 percent and 17 percent warmer than normal, respectively, to 24 percent and 22 percent colder than normal. The weather change increased weekly heating requirements by about 40 percent.
- Temperature declines during the winter affect heating oil demand in a number of ways:
- Space heating demand increases;
- Electricity peaking demand increases and power generators must turn to distillate to meet the new peak needs;
- Fuel switching from natural gas to distillate occurs among large customers with dual fuel capabilities, some by choice if distillate is cheaper, and some by the terms of their natural gas contracts.
- The weather not only increased demand, but high winds and frozen rivers kept barges from landing, further hindering re-supply.