Heating oil prices hit a five-year low: is now the time to stock up?

As of July, kerosene for home heating cost half the amount it did a year ago, reaching its lowest price in at least five years.

A litre cost 25p on average between May and July 2020.* At this price, buying 800 litres for your tank would cost around £200, compared with 50p per litre (and £400 for 800 litres) at the same time last year.

This made kerosene the cheapest home heating fuel over recent months - costing less per kilowatt hour (kWh) of power than natural gas.

However, crude oil prices have started to rise again, after being low for several months during the global coronavirus pandemic.

Where crude oil prices go, domestic kerosene prices often follow, so keep an eye out this autumn to make sure you get a good deal when you need to stock up.

Keep reading for tips on how to keep your oil heating costs low, or find out more about heating oil prices.

Why are home heating oil prices low?

Low kerosene prices in recent months are a result of global oil demand plummeting in the face of lockdowns across the world for consumers and industry.

We reported in May that heating oil prices were at their lowest for three years. Prices then dropped even further, from 36p per litre, on average, between February and April to 25p per litre between May and July.

Prices for fixed gas and electricity deals have also been cheap over the past few months. At the start of August, the cheapest deal for a household that uses a medium amount of gas and electricity cost £788 - £61 less per year than it did at the start of May.

Compare gas and electricity prices using our free independent service Which? Switch to find the best deal for you. You can look for electricity-only deals if your home doesn't have mains gas

Will heating oil prices rise this winter?

Over the past few years, heating oil prices have often been cheaper in spring or summer than winter.

However, this isn't always the case, as you can see from the graph below. For example, in 2018, prices were higher in spring and summer than the preceding winter.

Heating oil price per litre

The Office for National Statistics (ONS) announced last week that the largest fuel price increase in nearly a decade caused inflation to rise in July. It said that global oil prices have rebounded since lows earlier this year caused by the COVID-19 pandemic and economic slowdown.

Kerosene is distilled from crude oil, so its cost is impacted by the price of crude oil.

This suggests that heating oil prices may be on the up. However, global production, political unrest and the weather also affect prices.

Tips for buying cheap heating oil

Besides keeping an eye on prices, here are some tips to help you get the best price for heating oil:

• Buy in bulk It's usually cheaper than buying small amounts. Clubbing together with others in your area, or joining a heating oil club, means you can buy larger quantities.
• Plan ahead Keep an eye on the level in your tank - fast delivery is likely to cost more.
• Compare prices Get quotes from different companies regularly so you know what typical prices look like in your area and can spot a good deal.
• Consider payment options Some companies charge if you pay by credit card, while you'll have to enter into a contract with others to pay by direct debit.

Read more tips about getting the best price for heating oil.

Which? heating oil prices and energy prices research

* The average prices for kerosene heating oil are from Sutherland Tables, which collects comparative home heating costs from the UK and Republic of Ireland for each quarter of the year.

Electricity and gas prices are based on a dual fuel tariff, available in all GB regions, paying by fixed monthly direct debit with paperless bills. Energy use is based on Ofgem annual figures for a medium user (12,000kWh gas and 2,900kWh electricity). Data is from Energylinx, prices are averaged across regions and rounded to the nearest pound.