Commodities

Energy Analysis Report 10/14/19 – Heating Oil…Meet Biodiesel

When I think of Northeast Winter, I think of heating oil.  Growing up in the projects of New York City, each building had these big boilers ground and every so often I would see a tanker truck refilling the boiler.  As I got older finally realized the black plume of smoke I use to see, it was the combustion of the heating oil in the boiler as it was producing steam for heat and hot water.

NOTE: I grew up right there on the Lower East Side of Manhattan.

Now the Northeast heating oil industry is start to put pressure on the state in the New England regional to mandate biodiesel content in home heating oil in an effort to carbon emissions.   This should be an easy victory for the Industry as because a lot of the heating oil used in New England already contains some biodiesel, but its use is not required in every state.

And across the country, they are encouraging Seattle residents to switch to cleaner heating system by implementing a new tax on the sale of home heating oil to the tune of $0.24 / gallon starting 9/1/20.

Heating oil is a petroleum product refined from crude oil. Heating oil and diesel fuel are closely related products called distillates.  Distillation is the process of separating the components or substances from a liquid mixture by using selective boiling and condensation.  I studied chemical engineering in college and can appreciate the massive refiners out there.

Image result for refiners

Refiners who produce heating oil often make decisions about how much to produce based on the price they are paying for crude oil. However, buying your heating oil during the summer months is usually a better bet because prices tend to drop based on the lack of demand.

As the winter approaching, what can homeowners expect to pay for the price of heating oil, lets go to the charts to find out?

Monthly Chart (Curve Time Frame) - monthly supply is at $2.4560 and monthly demand is at $1.6000.

Weekly Chart (Trend Time Frame) – the trend is sideways.

Daily Chart (Entry Time Frame) – the chart suggests to play the extremes, wait for price to get to the daily supply or daily demand before considering a trade set-up

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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