Heating Oil Trading

Heating Oil Trading

Heating oil is refined from crude oil. It is a liquid petroleum product, and a commodity that is traded on the financial markets. Heating oil has widespread applications for residential heating, for furnaces, fuel oil, and boilers in tenements. Homes that don’t use natural gas typically substitute with heating oil for their energy requirements. Heating oil is abbreviated as follows: HHO

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At AvaTrade UK, clients get to use sophisticated trading platforms UK like AvaTradeGO and MetaTrader 4 to trade heating oil. Here are some of the benefits you will enjoy: High trading leverage of up to

• Leverage as high as
• Competitive spreads on HHO
• An outstanding multi-lingual customer service
• Trading educational resources and rich analysis
• Trade heating oil on the go with the AvaTradeGO trading mobile app

Ever since the oil burner was invented in the 1920s, heating oil gained in importance. It is cheaper than coal, and is a better prospect for indoor heating purposes. Plus, heating oil is better for the environment, and easier to work with. Over the years, heating oil has become more efficient to use – it is cleaner and safer to use. Thanks to its widespread applications, heating oil is an excellent way to control temperatures via the thermostat. Typically, heating oil is delivered to homes by tank trucks for residential and commercial buildings, and it is stored in tanks.

Heating oil is an affordable energy resource, and prices have dropped significantly. In the United States, the heating oil industry is valued at over £16 billion.

The prices of Heating Oil

Multiple factors affect the price of heating oil. To guard against price volatility, heating oil producers use short hedges. These set a fixed selling price (SP) for the heating oil to be traded in contracts. The futures market for heating oil is used to determine prices for diesel and jet fuel.

Seasonal fluctuations in demand can cause volatility in prices. Heating oil prices typically rise in spring. Note that there is an inverse correlation – an opposite relationship – between the USD and commodities. Contracts are settled in USD, so when the USD moves up or down, so too does the price of commodities like heating oil. This does not alter the value of the oil, it simply indicates a different value for the USD.

In futures contracts, trades of heating oil are denominated in units of 1,000 barrels. The minimum price fluctuation is £0.0001 per gallon. Crude oil prices take the lead over gas prices. But, crude oil processing will also determine how prices move. Seasonal changes (for example the summer fuel blend) leads to higher petroleum prices.

The EPA (Environmental Protection Agency) of the US has determined that the April – June period is known as the transition season to produce fuel. Refineries across the US compensate for this between March – April. There is a different fuel blend used in summer than there is in winter.

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Acts of God such as Hurricane Harvey can have a dramatic effect on the price of heating oil. Consider situations where workers are evacuated from oil platforms, or drilling rigs in the Gulf of Mexico, and production stops. This will lead to a rise in prices. Today, oil prices are more volatile than they were 10 years ago. There are many reasons for this, including supply considerations, expectations of futures traders, and tax-related issues.