18th May 2026
Why are heating oil prices going down slightly when the oil price is going up?.
It is probably a mixture of both seasonal effects and demand resistance from consumers and right now the second factor may actually be becoming more important.
Heating oil prices do not always move instantly with crude oil. Even though crude has surged back towards $111, domestic heating oil in the UK can lag behind for several reasons:
distributors bought stock earlier at lower prices,
wholesale inventories may still be relatively healthy,
and summer demand is much weaker than winter demand.
The seasonal factor is definitely real. As temperatures rise across spring and summer:
households stop daily heating,
tanks are already partly filled after winter,
and people become more willing to “wait and see” before buying.
That naturally weakens demand and puts downward pressure on prices even when crude oil rises.
But there is also growing evidence of what economists call “demand destruction” or consumer resistance.
After the huge energy shocks since 2022, many households have changed behaviour:
using less heating overall,
improving insulation,
delaying top-ups,
switching partially to wood burners, heat pumps or electric heating,
and only buying minimum quantities when prices spike.
Rural households especially have become very price-sensitive. Many now monitor prices constantly and refuse to fill tanks during sudden oil surges unless absolutely necessary.
Suppliers know this. If they raise heating oil prices too aggressively in summer, sales volumes can collapse because customers simply postpone purchases for weeks or months. That creates competitive pressure between distributors.
Another important point is that heating oil markets are influenced more by local refining and distribution conditions than by crude oil alone. If diesel and heating oil refining margins soften, retail heating oil prices can fall temporarily even while crude rises.
There is also a psychological element. Markets currently believe:
Summer demand will remain weak, governments may intervene again if oil spikes too far, and some of the current crude surge may still unwind if Middle East tensions ease.
So retailers may be reluctant to fully pass through the latest crude increases immediately because they fear being caught with overpriced stock if oil suddenly drops back again.
The really important test will come later in the year. If crude stays near $110-$120 into autumn, then seasonal demand for heating oil will start rising again just as inventories may be tighter. In that situation, retailers would likely regain pricing power and heating oil costs could climb much more sharply going into winter.
Summer seasonality is helping keep heating oil prices down, but there is also genuine consumer resistance and weaker demand after years of high energy costs, and suppliers appear cautious about pushing prices too high while demand is fragile.