U.S. heating oil, propane bills to rise this winter

U.S. residential heating oil and propane prices have risen 23% and 4%, respectively, at the start of the 2018-19 winter heating season, from the same time last winter, according to the U.S. Energy Information Administration. The heating season includes October through March, and residential heating oil and propane prices are expected to be higher this season than last year and will lead to higher bills, which are also influenced by the weather.

The 2018-19 winter is expected to be colder than last winter throughout much of the United States, according to the National Oceanic and Atmospheric Administration. In the Midwest, however, temperatures are expected to be 1% warmer than last winter. Most homes in the Midwest use propane for heating.

Higher crude oil prices and lower fuel inventories are expected to lead heating oil and propane prices to rise 14% and 4%, respectively, this winter, from last winter. Petroleum products such as heating oil and propane often follow changes in the Brent crude oil spot price, which is the international benchmark price for crude oil. The spot price rose $2 per barrel to an average of $81 per barrel in October, from September, according to the EIA. On Oct. 31, the price declined to $75 per barrel, from $85 per barrel on Oct. 1. This winter, the price is projected to rise $10 per barrel to an average of $74 per barrel, from last winter. The Brent spot price is expected to be an average of $72 per barrel in 2019.

Inventories of U.S. heating oil are lower this year than they were last year, but they are within the range of the previous five-year average. Distillate inventories declined to low levels earlier this year as distillate demand rose as a result of strong global industrial and economic activity. The inventories have since increased but remain lower than the five-year average.

U.S. propane/propylene inventories were 83 million barrels as of Oct. 26, and were 3% lower than the previous five-year average. The inventories have been lower than the previous five-year average for most of the past two years because of lower inventory levels on the Gulf Coast as a result of new infrastructure that’s optimized for maximum export volumes.