Weather will be the major factor affecting demand, and, thus, could also cause prices to vary significantly from the EIA forecast. Although the residential market share for heating oil has been declining as more consumers favor other primary heating fuels, consumption can still vary greatly based on weather. This year, winter temperatures are expected to return closer to normal levels after last year's very mild weather. Based on the National Oceanic and Atmospheric Administration (NOAA) weather forecast, EIA projects population-weighted U.S. heating degree days will be about 18 percent higher than last winter, which was the fourth warmest winter on record and the warmest since 1999-2000, but about 2 percent lower than the 30-year (1971-2000) average. Heating degree day projections vary between different regions. For example, heating degree days in the Northeast, which includes about 80 percent of all households that use heating oil as their primary heating fuel, are projected to be about 20 percent higher than last winter. However, any variation in actual weather from the forecast could cause demand to vary.
Heating oil markets are tight as winter approaches