During the last week of August oil prices recovered sharply, but it did not last long. This growth came as a result from the August 24th stock crash. Following China’s decision to cut interest rates of the yuan, a certain dose of panic started to hover stock exchanges first in Asia, and later the same day in Europe and the US. However, things went to a calm on Wednesday August 26th which helped the oil price recover by 9% in a single day of trading. New York oil price, at which domestic oil primarily used for heating purposes is traded, grew by $3.96 to $42.56. This price is still really low (on the same date last year it was around $92).

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During August 28 and 31 trading, oil price started to fall once again. It’s still not certain what led to that, but some experts accuse market speculations: traders earned a lot of money from the last week’s quick growth and amount of oil transactions fell, pushing the price down. Another reason.

As the new heating season approaches, people have been asking themselves what would be the heating oil price the upcoming fall and winter. Although it’s hard to assume what oil prices will be like in the next six months, it’s clear that currently there are much more forces which push the prices down, than those which may raise them. First of all, Iran nuclear agreement signed earlier this summer opens the doors for exporting this country’s huge oil inventories which would increase supply. Also, major oil producers such as Saudi Arabia continue to increase their rig count. A possible price cutting force would be the Fed decision to increase interest rates of the dollar. As dollar exchange rate has been counter-proportional to the oil price, it would be expected to let the oil price down, or at least keep it this low. Consumers must be aware that $40 for the barrel is very close to the break-even price, and it can’t fall much below the current prices which remain around $45. There are another factors pushing the prices down: expectations that sanctions against Russia will be lifted in a timely manner which would lead to the greatest global oil rig count ever, increased environment awareness which lets people and commerce use more renewable energy sources such as solar, wind, hydropower and biofuels.

Price raising forces, on the other hand include expected demand growth from various sources. Cheaper oil let people buy larger cars or simply drive more and spend more oil. Airlines also cut their fares letting people fly more and introduced many new frequencies across the globe. Europe is about to recover from the Greek debt crisis, since it’s expected that new government in Athens would accept debt payoff terms proposed by the European Central Bank, which sparks market optimism in the Old Continent.

What is certain is that oil prices for the 2015/16 winter season will be much lower than the previous season. Would it be $40 or $60 for barrel it’s hard to tell, but it’s almost certain that retail price of heating oil will be around $2.50 for a gallon, or even somewhat less.