equally anemic demand for heating oil, caused mainly from its loss of market share to other fuels. This correlation will likely disconnect at some point. Terminals are expensive to keep up. The considerable curtailment in storage and contraction in the number of suppliers to the marketplace makes logistics challenging, particularly when trying to meet a demand curve that packs 80 % of the call for supply into just 90 days. There are no signs of abatement here. One prominent supplier recently closed a terminal in Connecticut. That same supplier also closed a terminal recently in New Jersey. Tertiary
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. com storage has been and continues to shrink thanks to the environmental regulations. Meanwhile, as the industry transitions to renewables it will continue to suppress the demand for oil storage.
Having a supply contract can offer both security of supply as well as advantageous pricing when done correctly. It is absolutely essential to run historical back testing of any supplier offers. You’ ll want to see when and how often the index beats your normal rack basis! If you don’ t supply your own data, it would mean using another source like OPIS. OPIS has great data, but it is expensive and it’ s not organic to your own company’ s purchasing history. Think of it this way; a year of OPIS data along with the supplier’ s likely index( Argus) data can cost between $ 2,500.00 and $ 5,000.00. So, it makes sense to make the effort and implement your own data collection!
OIL PURCHASING SCORES AND BASIS ANALYSIS
Lastly, though certainly not least important, is what we call your purchasing score. Just how well are you doing in purchasing your oil these days? What can the data tell you about this and can it improve profit margins? The data can tell you plenty, and it certainly can improve profit margins. The same four data points in our discussion here can produce several very critical views of how you are doing in purchasing the oil and its impact to your daily margins. We use our proprietary software called MarginTrak2. There are a couple of reports that have become invaluable tools to our clients that produce clear visuals into how their purchases are impacting their daily margins.
One report in particular yields insights into day counting margins and can motivate you to change the way you purchase oil as well as how you set your rack to retail margin. The simple histogram below( chart A) shows how many days the client is spending at various margin levels. This is a picture that is truly worth a thousand words because it both illuminates as well as exposes the flaws in the industry’ s business model: The majority
16 JUNE 2025 | FUEL OIL NEWS | www. fueloilnews. com