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Tuesday, September 17, 2019

Price changes for Thursday, September 19th, 2019


Hi to all,



Here’s what I have for this week’s price changes in what has been one of the most remarkable weeks I’ve seen in oil in a very long time!



*Heating and stove oil shows an increase of 1.3 cents a litre.

*Diesel fuel shows an increase of 1.6 cents a litre, and...

*Gasoline shows a DROP of one cent.





Market highlights



It’s all Saudi Arabia and Iran folks!

Attacks against the Abqaiq production facility and the Khurais oil field were successful in knocking out 5.7 million barrels of production out of 9.8 million that was online.

     The Saudi’s have almost 12 million barrels a day of processing at its fingertips that was already shut down and mothballed because of OPEC cuts. Surprisingly, the cut to production has not affected fuel prices as much as was first thought they would be.

     While important infrastructure is already well on its way to returning to normal, the Saudi’s are saying by the start of November before capacity is back to the original 12 million barrels of production a day. Some of that was already in mothball as a result of past production cuts.

     UN investigators are said to be on the way to investigate the damage to Saudi facilities, and that itself may be enough to dissuade the U.S from taking any preliminary action or military intervention with Iran, who are being blamed by the U.S for the attacks.

     Houthi from Yemen have claimed responsibility and promised in a statement yesterday that more attacks are imminent, so, we may not be out of the woods on this situation yet.



Local effect

As regards to what NL consumers will see this week and next is probably all going to be determined by market factors over the next week. Projections are panning out a little lower than forecast a day ago. Right now, numbers are showing possible increases right across the board of 2.3 for heating, 1.8 on Diesel and 2.2 up for gasoline as a result of elevated spot prices.

     Hopefully, with any retreat in oil and refined product prices the next couple of days, these projections will turn around and show a drop in prices rather than any possible increase to consumers!



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil 

Tuesday, September 10, 2019

Price changes for Thursday, September 12th, 2019


Hi to all,



Here’s what I have for this week’s price changes:



*Heating and stove oils show an increase of 2.5 cents a litre.

*Diesel fuel shows an increase of 1.8 cents a litre, and...

*Gasoline shows an increase of 2/10ths of a cent per litre.



Market highlights



Peak oil here?

“Not likely” says I...

      While market speculators fret over the latest news on US domestic production growth and the latest rig counts, much is being said that the markets have hit peak production and demand is still rising. Others say we’ll hit peak production in the late 2020’s.

      And while there may be some evidence that US domestic production has indeed stalled for the moment, it doesn’t mean that we have hit key peak production in the face of rising demand for oil.

      The facts are simple.

      The only thing that is holding back on future increases in production are the fact that West Texas Intermediate prices are held down because no one wants to get pumping oil and not make a dollar at it. Production costs are higher than elsewhere, and Chinese tariffs on U.S exports to China simply don’t help. A low price for WTI isn’t good if you’re trying to generate interest in U.S shale reserves.

      It’s no wonder Baker Hughes has reported a decline in rigs operating south of the border in August as compared to July. There were 926 rigs operating against the July figure of 955, and well down from 1050 in August 2018.

      Brent prices have risen slightly as a result of lower production costs, particularly for Middle East crudes, all in the face of self-imposed production quotas.

      My best guess here is that this is at best a temporary slowdown as rising prices will bring domestic production up again as more get back into the markets.



EIA releases “STEO”: Short Term Energy Outlook

In a monthly update, the US Energy Information Administration has released its outlook on both West Texas and Brent crude oil for 2020.

     West Texas Intermediate prices are projected to average $56.31 US a barrel for 2019 and stay steady at $56.50 US for the rest of 2020, while Brent prices will average $63.39 US a barrel for the remainder of 2019 and then average $62 US a barrel in 2020.

     And on another note, the US EIA predicts domestic oil production to grow to 13.2 million barrels a day in 2020 from this year’s average of 12.2 million a day so far in 2019.



US EIA inventories

The Energy Information Administration released its latest inventory data last Thursday, a day later than usual as a result of the Labour Day holiday.

     Crude supplies dropped 4.8 million barrels, while gasoline also showed a drop of 2.4 million barrels.

     Distillate inventories were also down, but by 2.5 million barrels on 94.8 percent refiner capacity.

     US domestic production was set at 12.4 million barrels a day for the week ending August 30th.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil 

Tuesday, September 03, 2019

Price changes for Thursday, September 5th, 2019


Hi to all,



Here’s what I have for this week’s price changes:



*Heating and stove oils show an increase of 8/10ths of a cent a litre.

*Diesel shows an increase of 7/10ths of a cent, and...

*Gasoline shows a drop of 1.6 cents a litre.



Market highlights



U.S-China tariff dispute heats up

The U.S and China trade dispute has entered a new cycle.

This week, the U.S started adding another round of tariffs on Chinese goods with the promise of more tariffs to come December 15th. That has added concerns amongst traders that there will be a drop in crude demand in China as the Asian country faces a downturn in economic output to their largest trading partner.

     China was quick to respond.

     China also reacted by placing a 10 percent tariff on any U.S oil imports into China, throwing U.S producers offline and affecting U.S exports of crude.

      The Chinese have other places to but crude as most Middle East producers are shopping their wares to any nation that will take their supply.

     Brent crude prices were mainly supported, while West Texas Intermediate prices fell on the news, stalling U.S domestic growth the past few days since China placed tariffs on U.S crude.



End of summer

The summer driving season has come to an official end with the start of the school year now underway.

     Speculators are now placing their bids on the distillate group of fuels while gasoline has started to slide somewhat from summer highs.

     Consumers are at a disadvantage this year as spot prices for heating oils have not dropped appreciably from last winter’s highs, still ten cents a litre lower than last winter, but 13 cents higher than August of 2017 and the lead-up to winter. 
     On average, prices have crept up by ten cents a litre over the intervening winter months, so I expect to see heating oil prices to increase into the winter buying season.

     All oil price and distillate inventory dependent, of course.



U.S EIA inventories

The latest inventory report is out from the Energy Information Administration.

Wednesday’s inventories showed a draw-down of ten million barrels of crude , while gasoline and distillate fuels showed a drop of 2.1 million barrels each.

       Crude supplies are at the average level recorded over the last five years.

       Refiner capacity was recorded at 95.2 percent, up from the week previous, and U.S domestic production grew last week adding 200,000 barrels to sit at 12.5 million barrels a day.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, August 13, 2019

Price changes for Thursday, August 15th, 2019


Hi to all,



Here’s what I have for this Thursday’s price changes:



*Heating and stove oil to drop by 2.2 cents a litre.

*Diesel fuel to drop by 2.3 cents a litre, and...

*Gasoline to drop by 4.1 cents a litre.



Market highlights



US-China tariff argument

Everyone has been waiting for some sort of break in the trade and tariff war between the US and China.

     The U.S blinked today...

     The U.S Trade Representative office announced today that it would hold back on the placement of tariffs on some ten percent of Chinese goods that includes everything from electronics like laptops and cellular devices.

     Other goods, like toys, will not see any tariffs added until December 15th, which effectively means well after goods are shipped from China ahead of the Christmas season.

     China had been pondering cutting off sales of US shale oil to add another dimension to the tariff and trade war.

      Both the US and China have agreed to terms to begin talks again in two weeks time.



US inventories surprise

Wednesday last week saw the release of inventory data from the US Energy Information Administration that held a surprise for some expecting a draw on supplies.

     US crude inventories increased last week by 2.4 million barrels, while gasoline inventories also went into positive territory, adding 4.4 million barrels.

     Distillate inventories were also up, adding 1.5 million barrels.

     Refiner capacity was recorded at 96.4 percent, the highest of the summer season.

     Those factors helped drop oil and refined product prices lower in the past week before Wednesday’s rebound in crude prices.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil 

Tuesday, August 06, 2019

Price changes for Thursday, August 8th, 2019


Hi to all,



Here’s what I have for this week’s price changes:



*Heating and stove oil show a drop of 1.4 cents a litre.

*Diesel also shows downward by 1.4 cents, and...

*Gasoline shows a drop of 2.8 cents a litre.



Market highlights



US-China trade and tariff dispute deepens

The US and China trade dispute continues to play in the markets this week as the US promises more tariffs on Chinese goods totaling $300 billion dollars and with the Chinese retaliating with cutting off markets to agricultural products from the US.

     Already, some are fearing a deepening slowdown in China for oil as attention has quickly turned from Middle East tensions to a worsening of relations to the world super economic powers.

     Oil prices have suffered as a result with Brent crude dropping close to $5 US a barrel over the last week bringing Brent prices to their lowest in seven months.



In the Middle East

While things have been rocking between China and the US, tensions in the Middle East have taken a back seat to the economic dispute with the British now increasing security around tankers in the Persian Gulf and Gulf of Oman.



US Inventories

US inventory data from the Energy Information Administration showed that crude oil stocks continue to drop as refiner capacity keeps up with demand. Crude supplies dropped 8.5 million barrels while gasoline stocks showed a drop of 1.8 million barrels.

     Distillate inventories dropped 900,000 barrels on refiner capacity of 93 percent.

     The next inventory data will be released noon Newfoundland time.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, July 30, 2019

Price changes for Thursday, August 1st, 2019



Hi to all,



Here’s what I have for this week’s price changes:



*Heating and stove oils to increase by 8/10ths of a cent a litre.

*Diesel fuel to increase by 1.5 cents, and...

*Gasoline shows an increase of a penny a litre.



Market highlights

US inventories

US crude inventories took a major hit last week as crude supplies from the Gulf of Mexico were cut off with the disruption showing up in the data.

     Crude inventories dropped 10.8 million barrels while gasoline was down marginally by 200,000 barrels.

     Distillate inventories were up by 600,000 barrels on 93.1 percent refiner capacity.

     US domestic production dropped the same week with production recorded at 11.3 million barrels a day, possibly as a result of rig shutdowns throughout the Gulf of Mexico region as Hurricane Barry passed through. I fully expect those numbers to return to normal in the next inventory report Wednesday.



US-China trade and tariff talks on again

World oil prices increased slightly this past week as negotiators from both sides seek to end the impasse in trade talks between the US and China. Oil prices rose close on $2 US Brent as both sides are anxious to reach an agreement that would see China tariffs lifted.

     Still, the spectre of a slowing world economy and troubling stats out of China showing a slowdown there taking hold, held back prices from taking off as future oil demand was seen to be a factor.



US economic slowdown?

In the meantime, according to a Bloomberg story, the US is starting to show signs of a slowdown that could also start to play its part in lowering of demand and oil prices.

     Figures from the last quarter show US growth down to 2.1 percentage points from the first quarter’s 3.1 percent as the US Federal Reserve considers a rate cut to help bolster a possible stall in the US economy.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, July 23, 2019

Price changes for Thursday, July 25th, 2019


Hi to all,



Here’s what I have for this week’s price changes:



*Heating and stove oil to drop by 2.2 cents a litre.

*Diesel shows a retreat of 3.1 cents a litre, and...

*Gasoline shows a drop of 4.3 cents a litre.



Market highlights



US and Iran standoff?

Makes you wonder sometimes whether the US-Iran standoff over sanctions and the nuclear production deal are really enough to spur higher oil prices. Even as tensions rise, oil prices have not reacted in their usual manner as in the past with a knee-jerk rise in prices.

     I’ve wondered about this before and can really only attribute this “phenomenon” as to rising US domestic output of oil.

     Keeping in mind that the US has increased production by 1.4 million barrels in the last year alone (12.3million from 10.9 million), one can only imagine the growth rate should something sinister happen in the Straits of Hormuz and the Gulf of Oman that may temporarily disrupt shipping access points.

     But when you consider other factors such as a worldwide economic slowdown, dropping demand as predicted by the International Energy Agency, a steady but modest 1.1 million barrel a day output from Venezuela and the ongoing trade dispute between the US and China, you can be excused for feeling sceptical.



US EIA inventories

US supplies of crude oil dropped by 3.1 million barrels of oil, but inventories of gasoline showed a positive increase of 3.6 million barrels.

     Distillate supplies also increased by 5.7 million barrels, allowing the retreat of refined product prices.

      Refiner capacity was recorded at 94.4 percent.



That’s it for this week!



Regards,



George Murphy

Twitter: @GeorgeMurphyOil