What’s the Magic Number for Oil Prices?

Magic numbers graph

There has been plenty of good news these days about oil prices. In January 2016, we started off with the news that crude oil prices had reached a 13-year low. Though prices have crept up again recently—especially in light of some oil-producing countries considering production limits—the U.S. Department of Energy still forecasts that crude oil will average about $50 per barrel in 2017. That’s about 50% lower than in 2014. As of early November 2016, Brent crude, which is the global oil benchmark, stood at about $47 a barrel.

As you may know, heating oil, like diesel fuel and gasoline, is a “finished” product derived from crude oil. That’s why heating oil prices are so closely tied to the price of crude oil.

There are various reasons for these manageable prices, including giant increases in U.S. production. Recently, the Energy Department raised the forecast on U.S. crude oil production, which is now expected to average 8.84 million barrels a day this year and 8.73 million barrels a day in 2017. That’s up from earlier forecasts of 8.73 million in 2016 and 8.59 million in 2017. That’s a lot of oil!

Other factors helping to keep a lid on prices include a strong dollar and a slow growth in global demand.

So with another heating season upon us, the price outlook remains very positive. But nobody can predict for certain whether prices will rise or fall this coming winter.

To take away your worries, check in with your New Jersey heating oil dealer. Most offer programs designed to save you money and keep your heating bills manageable—no matter what happens with world oil prices.