Heating Oil locking forecast

[Jotul_Rockland]

I'm thinking it will be good to lock in the next 2-4 weeks. I expect the oil market to strengthen after Sept.

What's your advice?

 

[firefighterjake]

My advice is not to worry about heating oil prices and when to lock in or not to lock in . . . if you have plenty of wood or pellets.

Honestly, it often seems to be a crap shoot . . . probably someone a lot smarter (and better looking) than me could tell you when to lock in or what's the best way to get the best price on heating oil, but it's not me. I counted myself fortunate a few years back when I was heating mostly with oil and locked in at a decent price when it spiked to over $4 a gallon . . . and then didn't lock in when the price fell from the lock in price the following year . . . in my own case . . . just dumb luck.

 

[soupy1957]

I've heard some real horror stories about folks who "locked in" and then the price fell out of the bottom! They had to pay the price agreed upon, regardless.

I agree with Jake........get ready for the season, have enough wood on hand, and you'll be all set.

-Soupy1957

 

[Don2222]

Hello

I agree with Soupy, Pre-Buys can be very tricky!

So I insulated like crazy and got a pellet stove and a boiler that is 3 pass, cold start with an outdoor reset.

Doing that cut my oil consumption down from 931 gallons per year to 230 gallons per year for DHW mostly.

So now I do a summer BUY and that is it for the year.

I just did my summer buy at $3.46 per gallon so we will see what happens.

Good Luck!

 

[Jack Straw]

I worry about pre-paying for anything and then the company goes bankrupt and you loose your money.

 

[woodchip]

Over here, the fuel oil companies are happily locking people into fixed price contracts at present.

Something tells me that if the carp really hits the fan with the economies in the near future, oil will drop as all the economies slow down even more.......

It's all down to one question..... do you want a gamble ;-)

 

[smokinj]

Couple more cords of wood and let it ride! ;-)

 

[Jotul_Rockland]

Thanks ! I have a part of the house that cannot be heated by my wood insert.

2500 Sq feet heated by Jotul Rockland.
Unfortunately, 1700 Sq Feet needs oil to heat.

 

[gpcollen1]

1 - I never understood locking in. I figure you will do just as well in the long run if you pay real time prices. Locking in is just a gamble, of which we all know is very hard to win.

2 - I believe oil prices are artificially inflated once again. Economy still sucks and will through 2012...

 

[btuser]

They take the premium and buy futures contracts. 1000 gallons @ $.40 premium (sometimes its closer to $.80) then you spend $400 above market price now. Odds are prices will rise by 40 cents from now to January, but then again they could go much higher or drop. This is risk management, I doubt they're making a bundle on $.40/gallon.

If you're willing to pay a premium for risk management there's nothing stopping you from buying a couple calls out of the money on a small-time brokerage account.

 

[joefrompa]

I don't lock-in, I simply do a single cash on delivery fill before the winter and then expect to use ~120-150 gallons for the whole winter.

That being said, I'm timing it this year to do a delivery around August 10th-15th. As of right now, I expect oil to dive $5-10 around the end of July early August (say, $90/barrel). Then waver and have high volatility. With a little luck, fuel oil prices around here will drop to $3.59 a gallon, maybe even $3.49.

But honestly, I'm talking $15-30 saved. Not exactly bank breaking, at leasat for me.

 

[SlyFerret]

Hmm... This thread reminds me that I need to call my propane provider and have them come out and top off my 120 gallon tank.

-SF

 

[jharkin]

Can you get a price cap plan? That I would do... locking in at today's price I would not.


Its always a crap shoot.

WHY IT SHOULD GO UP
Ignore what you see on CNBC about price... whenever they mention "oil" price what they are stating is the price of WTI (West Texas Intermediate). The reality is that is only one of a dozen or so price benchmarks the mark uses, including Louisiana Sweet, Brent North Sea, Dubai, etc etc. the reality is that WTI price is actually DEPRESSED at 100 because over a regional oversupply at Cushing. Every other benchmark is at $110 -$120 and trending higher.

Also ignore all the talk of Saudi excess capacity. Its a joke. Its all heavy sour oil that's expensive to produce. If the market wanted that oil we wouldn't have see the SPR release move just recently. Another point to remember is htat its not the production capacity that matters - its how much they can export after internal consumption. Look up the Saudi export chart and you will see their exports have been going DOWN every year since 05 on skyrocketing internal consumption. The amount they can sell to the world market is in decline.


WHY IT MAY GO DOWN
What we see in reality is that whenever we get a price spike a crash follows. The reason is that price. It puts small business out of business and people out of work whch causes recession and kills demand and then the price retreats. It will probably happen again soon.



Bottom line, expect wild swings of price and alternating recession and boom as the new normal. Plan accordingly.

 

[joefrompa]

I don't lock-in, I simply do a single cash on delivery fill before the winter and then expect to use ~120-150 gallons for the whole winter.

That being said, I'm timing it this year to do a delivery around August 10th-15th. As of right now, I expect oil to dive $5-10 around the end of July early August (say, $90/barrel). Then waver and have high volatility. With a little luck, fuel oil prices around here will drop to $3.59 a gallon, maybe even $3.49.

But honestly, I'm talking $15-30 saved. Not exactly bank breaking, at leasat for me.

FYI, note my prediction here and note where oil is today during the economic crisis currently unfolding.

http://www.bloomberg.com/news/2011-...gains-as-u-s-economy-stall-crimps-demand.html


Quote from article, "Crude for September delivery declined $4.19, or 4.6 percent, to $87.74 a barrel at 12:29 p.m. on the New York Mercantile Exchange. It touched $87.25, the lowest level since Feb. 22 on an intraday basis. The contract has fallen 3.4 percent in 2011. "

In a few days (usually 4-12), this will translate into heating oil price dip. My intention of buying around August 10th is holding true, and I think oil will be around $85-90 a barrel at that time or $3.60-$3.70/gallon of heating oil.

I intend to re-fill my oil tank using a cash-on-delivery method at that time.

 

[Backwoods Savage]

I hope it also means a dip in gas prices.

 

[joefrompa]

It will - probably about a week as well. The oil needs to be bought, transported, refined, and shipped before we start seeing prices dip at the pump.

 

[btuser]

I loaded up a $3.40/gallon. Now it looks like we're talking another drop. I wish I had 2000 gallons storage. I would still have oil left right now from 2008.

My guess is the rich are trying to shake Obama out of the tree. Now that he's got enough to buy votes till 2012 the oligarchs are going after the hearts and minds of people.

 

[joefrompa]

Oil in my area just dropped $.20 a gallon. Damn I called that.

It's at $3.599 per gallon right now. I'm weighing whehter or not to give it a few more days. Regardless, if it stays at this price for a few days, I saved myself $40 by waiting 2 weeks.