Heating oil

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Heating oil, or oilheat, also known in the United States as No. 2 fuel oil and elsewhere as "red diesel", is a low viscosity, flammable liquid petroleum product used to fuel building furnaces or ("boilers"). It is commonly delivered by tank truck to residential, commercial and municipal buildings and stored in above-ground storage tanks ("ASTs") located in the basement or adjacent to the building. It is sometimes stored in underground storage tanks (or "USTs"), but less often than ASTs. This is due to the fact that a large proportion of heating oil customers are in the northeastern United States, where basements are common, as are concerns over potential environmental problems. Heating oil is less commonly used as an industrial fuel or for power generation.

Heating oil is usually colored by addition of fuel dyes to distinguish it from highly taxed road-use diesel. Red dyes are usually used, resulting in its "red diesel" name in countries like United Kingdom. Solvent Yellow 124 is added as a "Euromarker" since 2002 in European Union.

Heating oil is very similar to diesel fuel, and both are classified as distillates. It consists of a mixture of petroleum-derived hydrocarbons in the 14- to 20-carbon atom range. That is, heating oil's chemical formula is usually either C₁₄H₃₀, C₁₅H₃₂, C₁₆H₃₄, C₁₇H₃₆, C₁₈H₃₈, C₁₉H₄₀, or C₂₀H₄₂. During oil distillation, it condenses at between 250 °C and 350 °C. Heating oil condenses at a lower temperature than the heavy (C20+) hydrocarbons such as petroleum jelly (also known by the well-known brand name Vaseline), bitumen, candle wax, and lubricating oil, which condense between 340 °C and 400 °C. But it condenses at a higher temperature than kerosene, which condenses between 160 °C and 250 °C.

For efficient burning, the oil is pressurized through a calibrated orifice; the atomized droplets mix with air and ignite, often with help from a high-voltage spark. Heating oil produces 19,500 BTU per pound (45 MJ/kg) and weighs 7.2 pounds per imperial gallon (0.72 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 of 52 °C.

Leaks from tanks and piping are an environmental 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 (HazMat) by federal regulators.

Heating oil may be blended with biofuel to create a product similar to biodiesel known as "bioheat".

[edit] Heating oil trade

Heating oil accounts for about 25% of the yield of a barrel of crude oil, the second largest "cut" after gasoline (petrol). The heating oil futures contract trades in units of 42,000 U.S. gallons (1,000 barrels) and (for the USA) is based on delivery in the New York harbor. Options on futures, calendar spread options contracts, crack spread options contracts, and average price options contracts give market participants even greater flexibility in managing price risk.

The heating oil futures contract is also used to hedge diesel fuel and jet fuel, both of which trade in the cash market at an often stable premium to NYMEX Division New York Harbor heating oil futures.