Heating Oil introduction and background |
Heating oil is a refined petroleum product commonly used for residential and commercial heating purposes. Also known as fuel oil No. 2, it is derived from crude oil through a refining process. Heating oil is a popular choice for heating homes, buildings, and industrial facilities, particularly in colder regions where it provides a reliable and efficient source of heat. Accordingly, demand for heating oil is highly seasonal.
The price of heating oil is influenced by several factors, including crude oil prices, supply and demand dynamics, weather conditions, and geopolitical events. Changes in crude oil prices, in particular, have a significant impact on heating oil prices, as heating oil is a refined product of crude oil after ‘cracking’ in refineries.
Heating oil is an industrial commodity, but most of its applications are domestic. Heating oil is more illiquid than other oil products, and often quite volatile. Like other industrial commodities, heating oil may trade in supercycles.
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