Heating oil
Heating oil, or oil heat, is a low viscosity
Viscosity is a measure of the resistance of a fluid which is being deformed by either shear or tensile stress. In everyday terms , viscosity is "thickness" or "internal friction". Thus, water is "thin", having a lower viscosity, while honey is "thick", having a higher viscosity...

, flammable liquid petroleum product
Petroleum product
Petroleum products are useful materials derived from crude oil as it is processed in oil refineries.According to crude oil composition and demand, refineries can produce different shares of petroleum products. The largest share of oil products is used as energy carriers: various grades of fuel...

 used as a fuel for furnace
A furnace is a device used for heating. The name derives from Latin fornax, oven.In American English and Canadian English, the term furnace on its own is generally used to describe household heating systems based on a central furnace , and sometimes as a synonym for kiln, a device used in the...

s or boiler
A boiler is a closed vessel in which water or other fluid is heated. The heated or vaporized fluid exits the boiler for use in various processes or heating applications.-Materials:...

s in buildings. Home heating oil is often abbreviated as HHO

Heating oil is commonly delivered by tank truck
Tank truck
A tank truck or road tanker is a motor vehicle designed to carry liquefied loads, dry bulk cargo or gases on roads. The largest such vehicles are similar to railroad tank cars which are also designed to carry liquefied loads...

 to residential, commercial and municipal buildings and stored in above-ground storage tanks ("ASTs") located in the basements, garages, or outside adjacent to the building. It is sometimes stored in underground storage tanks (or "USTs") but less often than ASTs. ASTs are used for smaller installations due to the lower cost factor. Heating oil is less commonly used as an industrial fuel or for power generation.

Red dyes are usually added, resulting in its "red diesel" name in countries like the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

. Solvent Yellow 124
Solvent Yellow 124
Solvent Yellow 124 is a yellow azo dye used in European Union as a fuel dye. It is a marker used since August 2002 to distinguish diesel fuel intended for heating from a higher-taxed motor diesel fuel...

 is added as a "Euromarker" since 2002 in European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...


Heating oil is very similar to diesel fuel, and both are classified as distillates. It consists of a mixture of petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

-derived hydrocarbon
In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons from which one hydrogen atom has been removed are functional groups, called hydrocarbyls....

s in the 14- to 20-carbon atom range. During oil distillation
Fractional distillation
Fractional distillation is the separation of a mixture into its component parts, or fractions, such as in separating chemical compounds by their boiling point by heating them to a temperature at which several fractions of the compound will evaporate. It is a special type of distillation...

, it condenses at between 250 and 350 °C (482 and 662 °F). Heating oil condenses at a lower temperature than the heavy (C20+) hydrocarbons such as petroleum jelly
Petroleum jelly
Petroleum jelly, petrolatum, white petrolatum or soft paraffin, CAS number 8009-03-8, is a semi-solid mixture of hydrocarbons , originally promoted as a topical ointment for its healing properties...

, bitumen, candle wax, and lubricating oil, which condense between 340–400 °C (644–752 °F). But it condenses at a higher temperature than kerosene
Kerosene, sometimes spelled kerosine in scientific and industrial usage, also known as paraffin or paraffin oil in the United Kingdom, Hong Kong, Ireland and South Africa, is a combustible hydrocarbon liquid. The name is derived from Greek keros...

, which condenses between 160–250 °C (320–482 °F).

Heating oil produces 138500 BTU per US gallon and weighs 7.2 pounds per US gallon (0.85 kg/l), which is about the same heat per unit mass as the somewhat less dense diesel fuel. Number 2 fuel oil has a flash point
Flash point
The flash point of a volatile material is the lowest temperature at which it can vaporize to form an ignitable mixture in air. Measuring a flash point requires an ignition source...

 of 52 °C (125.6 °F).

Leaks from tanks and piping are an environmental
Natural environment
The natural environment encompasses all living and non-living things occurring naturally on Earth or some region thereof. It is an environment that encompasses the interaction of all living species....

 concern. Various federal and state regulations are in place regarding the proper transportation, storage and burning of heating oil, which is classified as a hazardous material
Dangerous goods
Dangerous goods are solids, liquids, or gases that can harm people, other living organisms, property, or the environment. They are often subject to chemical regulations. "HazMat teams" are personnel specially trained to handle dangerous goods...

 (HazMat) by federal regulators.

Heating oil may be blended with biodiesel
Biodiesel refers to a vegetable oil- or animal fat-based diesel fuel consisting of long-chain alkyl esters. Biodiesel is typically made by chemically reacting lipids with an alcohol....

 to create a product that burns similarly.

Heating oil trade

Heating oil accounts for about 25% of the yield of a barrel of crude oil, the second largest "cut" after gasoline
Gasoline , or petrol , is a toxic, translucent, petroleum-derived liquid that is primarily used as a fuel in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain...

 (petrol). Options
Option (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...

 on futures, calendar spread options contracts
Option contract
An option contract is defined as "a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer." Restatement of Contracts § 25 ....

, crack spread
Crack spread
Crack spread is a term used in the oil industry and futures trading for the differential between the price of crude oil and petroleum products extracted from it - that is, the profit margin that an oil refinery can expect to make by "cracking" crude oil .In the futures markets, the "crack spread"...

 options contracts, and average price options contracts give market participants even greater flexibility in managing price risk.

Heating oil futures are traded on the Intercontinental Exchange (ICE) and NYMEX. These contracts have delivery dates in all 12 months of the year and are used to hedge
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...

 diesel fuel and jet fuel
Jet fuel
Jet fuel is a type of aviation fuel designed for use in aircraft powered by gas-turbine engines. It is clear to straw-colored in appearance. The most commonly used fuels for commercial aviation are Jet A and Jet A-1 which are produced to a standardized international specification...

, both of which trade in the cash market at an often stable premium to NYMEX Division New York Harbor
New York Harbor
New York Harbor refers to the waterways of the estuary near the mouth of the Hudson River that empty into New York Bay. It is one of the largest natural harbors in the world. Although the U.S. Board of Geographic Names does not use the term, New York Harbor has important historical, governmental,...

 heating oil futures.

United States and Canada

Heating oil is known in the United States as No. 2 heating oil. In the U.S., it must conform to ASTM standard D396. Diesel and kerosene
Kerosene, sometimes spelled kerosine in scientific and industrial usage, also known as paraffin or paraffin oil in the United Kingdom, Hong Kong, Ireland and South Africa, is a combustible hydrocarbon liquid. The name is derived from Greek keros...

, while often confused as being similar or identical, must conform to their own respective ASTM standards. Heating oil is widely used in parts of the United States and Canada where natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...

 is not available and propane
Propane is a three-carbon alkane with the molecular formula , normally a gas, but compressible to a transportable liquid. A by-product of natural gas processing and petroleum refining, it is commonly used as a fuel for engines, oxy-gas torches, barbecues, portable stoves, and residential central...

 is priced higher. Where other fuels are not available, it is sometimes referred to as the unit cost per unit (BTU=British thermal unit
British thermal unit
The British thermal unit is a traditional unit of energy equal to about 1055 joules. It is approximately the amount of energy needed to heat of water, which is exactly one tenth of a UK gallon or about 0.1198 US gallons, from 39°F to 40°F...

 or BTUH / h per hour), and can be less than other fuels.

The heating oil futures contract
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...

 trades in units of 1000 barrels (159 m³) with a minimum fluctuation of $0.0001 per gallon and (for the USA) is based on delivery in the New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...


Republic of Ireland and Northern Ireland

Heating oil is the most common method of home heating in Northern Ireland due to the late development of a natural gas network. Bord Gáis
Bord Gáis
Bord Gáis Éireann , normally branded as Bord Gáis, is the main supplier and distributor of pipeline natural gas in the Republic of Ireland. The company has built an extensive network across Ireland. The company supplies gas to domestic and industrial customers on a fully regulated basis...

 has built an extensive gas pipeline network across Ireland. Common suppliers of heating oil in Ireland are Maxol
-Republic of Ireland:*Maxol Lubricants Ltd. *Maxol Direct Ltd. *Maxol Ltd....

 and Emo Oil
Emo (oil)
Emo Oil is an Irish oil distribution brand that is based in Portlaoise and is named after a village called Emo in County Laois, Ireland. While also having a market in Great Britain, the brand is used by several divisions of DCC Plc....


England, Scotland and Wales

Heating oil is a method for home heating that is used sporadically around England, Scotland and Wales. Similar to Northern Ireland it is the rural areas and communities that rely on oil for the method of heating. There are around 1.5 million people in Great Britain using oil for home heating. Great Britain has many suppliers of heating oil ranging from large companies such as BP
BP p.l.c. is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by revenues and one of the six oil and gas "supermajors"...

 and Bayford to the local oil supplier who will cover a very small area.

The Department of Energy and Climate Change (DECC) have refereed the UK oil market to the Office of Fair Trading (OFT) for review. The OFT has resolved to look at the structure of the market, with a view of the fairness for consumers and alternative energy options for off grid consumers such as heat pumps.


The degree day system is based on the amount of fuel a customer has consumed between two or more deliveries and the high and low outdoor temperatures during the same period. A degree day is defined as one degree of temperature below 65°F in the average temperature of one day. In other words, to arrive at the number of degree days in one day, the official high and low temperatures for that day must be obtained. The two figures are then averaged, and the number of units this average is below 65 °F is the number of degree days for that day. For example, if for Tuesday, November 3, the high temperature is 70 °F and the low is 54 °F, the average is found by adding 70 and 54, which equals 124, and then dividing by 2. The resultant figure is 62, and by subtracting 62 from 65, it is determined that there were three Fahrenheit degree days that day.

The K factor is the number of degree days in any given period divided by the number of gallons of fuel oil used in a given period. Multiplying K degree-days per gallon by the number of gallon of usable fuel remaining in a tank gives the number of degree-days before a delivery is needed.

United States

The Department of Energy tracks the prices homeowners pay for home heating fuel (oil and propane). There are also a number of websites that allow home owners to compare the price per gallon they are paying with the Department of Energy data as well as other consumers in their area.

See also

  • Oil burner
    Oil burner
    An oil burner is a heating device which burns fuel oil. The oil is atomized in to a fine spray usually by forcing it under pressure through a nozzle...

  • Fuel price risk management
    Fuel price risk management
    A specialization of both financial risk management and oil price analysis – and similar to conventional risk management practice – fuel price risk management is a continual cyclic process that includes risk assessment, risk decision making, and the implementation of risk controls...

  • Hazardous material
  • Heating, ventilation and air-conditioning (HVAC)
    HVAC refers to technology of indoor or automotive environmental comfort. HVAC system design is a major subdiscipline of mechanical engineering, based on the principles of thermodynamics, fluid mechanics, and heat transfer...

  • United States:
    • New England Fuel Institute
      New England Fuel Institute
      The New England Fuel Institute is a regional business and trade association headquartered in Watertown, Massachusetts that represents the home heating fuels industry in greater New England...

    • Northeast Home Heating Oil Reserve
      Northeast Home Heating Oil Reserve
      The Northeast Home Heating Oil Reserve was created in July 2000 to provide a reserve of heating oil for the approximately 5.3 million households in the Northeast region of the United States that use heating oil for their homes.-History:...

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