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Tuesday, January 17, 2017

Price changes for Thursday, January 19, 2017

Hi to all,

Here's what I have for this week's price changes. Keep in mind my margin for error of 3/10ths of a cent when you look at that heating/stove number!

*Heating and stove oil shows an added 2/10ths of a cent a litre.
*Diesel fuel shows a drop of a penny a litre, and...
*Gasoline shows a drop of 1.1 cents a litre.


Majors moving to land
      In what is probably a sign of the times, large oil companies are beginning to make a move to shore where lower expenses to get into the oil game show more promise.
      A good example of this is a new acquisition of drilling rights by Exxon/Mobil who, with a few billion dollars more, have made a major expansion into the Permian basin in New Mexico.
Estimates are already in showing an estimated 3.4 billion barrels of reserves in the acquired property.

International Energy Agency and a possible flood of oil
       It took them long enough...
      The International Energy Agency is looking at a huge increase in US oil exports to begin just in the next few months that could be the spark to start another oil war for market share with OPEC.
      Because oil prices have hit a level where some profits can be made, the IEA is predicting that US domestic production will be quick in to fill the gap left by OPEC production cuts.

    Look for oil prices to stay "loopy" for the next little while in what could be the lead-up to another price war!

That's it for this week!


Twitter @GeorgeMurphyOil

Tuesday, January 10, 2017

Price changes for Thursday, January 12, 2017

Hi to all,

Here’s what I have for this week’s price changes, keeping in mind winter blending which may throw off the distillate numbers somewhat.

*Heating and stove oils show a drop of two cents a litre.

*Diesel fuel shows a drop of 2.7 cents a litre, and...

*Gasoline shows a drop of 3.2 cents a litre.

Media release

Conception Bay South, NL, January 10,2017- “It may be the start of a decline in prices that, if market sentiment sticks around, could lead to steeper drops in price in the next few weeks.“ That’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Speculators for the last six weeks have played up oil prices with the fact that OPEC has stepped in and made substantial cuts to production, but the fact that they left a gaping hole for other producers to step into, may very well be coming back to bite them. As predicted would happen, smaller US domestic producers seem to be coming back into the market, and that is beginning to show in the U.S rig count and worldwide.

“It’s not just from the U.S that I am seeing a quick return to the markets. Worldwide, the rotary rig count increased last week by another 94 rigs, sparked by restarts in Canada and other centres where shale resources were previously being explored. World-wide, that amounts to 1772 rigs operating, with last week’s return of 94 rigs, the highest increase week-on-week that I have seen.

“Doubts about the ability of oil to maintain present pricing levels are permeating the markets, at least for the time-being, and that’s the basis for some relief for consumers this week. OPEC member compliance is also an important factor with both Libya and Iraq exports beginning to climb.

“The Canadian dollar also is a factor this week, rising in value against the U.S greenback in the face of falling oil-at least for the time-being. The Canuck Buck has gained almost three cents in the last two weeks as a result of a mostly positive Canadian jobs report last week. A rising Canadian dollar against the U.S greenback has the tendency to drop prices further.”


For more information, contact:

George Murphy
Twitter @GeorgeMurphyOil

Wednesday, January 04, 2017

Price changes for Thursday, January 5, 2017

Hi to all,

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

*Heating and stove oils show an added 1.4 cents a litre up.
*Diesel shows an added penny upwards, and...
*Gasoline shows an added 1.2 cents a litre at the pumps.


US EIA inventory data still shows demand for gasoline
     US Energy Information data still showed demand for gasoline to remain up in the lead-up to the Christmas travel season, but this week began to taper somewhat. It may be as simple as investors not seeing demand continue in the weeks after the holidays and that may be the beginning of what hopefully will be a retreat in prices. Any building of inventories during winter on gasoline may be enough to lower prices in the coming weeks.
     The US EIA reported a drop of 1.6 million barrels. Inventories remain a rough 5 million barrels over the same timeframe last year.

Local word
     With snow-clearing becoming a prevalent issue on people’s minds, it remains a wonder why government has not taken some of the new gas tax money and re-invested back into 24 hour snow-clearing.
     Last year, government collected $193.98 million in gasoline taxes and it’s own estimates predict $312 million will be collected with the doubling down of the gas tax in year one.
     Government also said they would save a mere $1.9 million in getting rid of 24 hour snow-clearing.
     “As a matter of public safety first and foremost, why can’t government take the $1.9 million from the new gas tax money and retain proper snow-clearing for the people of the province? It’s obvious right now that their new program is not working, plain and simple”. That’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.
      “Government must understand also that our highways are part of how we carry out commerce in this province, and if they aren’t useable, then we don’t generate needed revenue for business, and also for government.
       Basic services suffer.
        Not cleaning roads may in fact cost government more than just savings. It could cost jobs, let alone lives!”

Letter to the Public Utilities Board: Transportation study needed for Labrador market
     I will be writing the Public Utilities Board in the next couple of days to ask that the Board review transportation costs of fuel, particularly to coastal Labrador.
     The reason is simple really...
     Before Christmas we all saw that Coastal Shipping, a branch of the Woodward Group lay off a hundred Newfoundland and Labrador personnel in favour of cheaper labour aboard five of their ships.
    “If labour is a major cost to them of doing business that has been claimed as an allowable expense in the transport of fuels and mark-ups to consumers as a result, then prices for the transport of fuels to Newfoundland ports of call, but  particularly to coastal Labrador must come down as a result of paying out lower wages. Just because you fly a ‘flag of convenience’ does not mean consumers should pay. If tanker costs are coming down for the company, fuel costs have to come down for the consumer.”

That’s it for this first year’s edition!


George Murphy

Twitter @GeorgeMurphyOil

Tuesday, December 27, 2016

Price changes for Thursday, December 29, 2016

Hi to all,

Here's what I have for this week's price changes.

Keep in mind that this week's numbers may be off somewhat as a result of today's missing data. I had to take my "best guess" on spot prices today just based on oil price closure. Six days of this week's data is good however, so the numbers are probably not that far off from the actual that may occur.

*Heating and stove oils show an increase of 2.3 cents a litre.
*Diesel shows an increase of 1.8 cents, and...
*Gasoline shows an added 3.2 cents a litre this week.

Market highlights

Watching and waiting
     While trading in oil was lacklustre over the last week due to Christmas holidays, some data is starting to emerge from the tail end of OPEC and non-OPEC cuts due to be implemented in January. Already, some drillers are back in the field and the latest rig count seems to confirm in no uncertain terms, that they're headed back to take advantage of a hole left in the production of oil.
      I think OPEC has forgotten that just a year and half ago, approval was sought and granted, to oil producers in the US to step up exports if the time and market conditions were ever to allow.
      They did, once the shale boom hit and oil prices remained over $100 US a  barrel.
      This week saw another gain the US rotary rig count with the shale industry adding another 13 rigs to working inventory.
       I'm waiting on further data from the US Energy Information Administration on Thursday that will most likely see another increase in US domestic production, which last week, saw production hit 8.797 million barrels a day.

OPEC production data
      The latest data on total OPEC production on the heels of self-imposed cuts should be available sometime during the first week of January.
       What is also going to be more interesting to watch is to see how much both non-OPEC producers who signed on to cuts and non-OPEC producers out there altogether, are doing to either reign in on production, or actually beginning to produce more to meet the "shortfall" created by OPEC cuts to production.
        You have to keep in mind here the simple fact of capitalism in all this equation: a company is supposed to make money for its shareholders and those companies can't do that, or attract investors, with a plan that doesn't show growth. That's going to be an important "motivator" in all this.

       Let's see who comes out on top...


Twitter @GeorgeMurphyOil

Tuesday, December 20, 2016

Price changes for Thursday, December 22,2016

Hi to all,

Here’s what I have for price changes for Thursday, December 22,2016.

*Heating and stove oils show an increase of 1.2 cents a litre.

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

*Gasoline shows an increase of 2.8 cents a litre.

Market highlights

US rotary rig count increases

     US drillers are heading back to the oilfields, and OPEC should be worried...

     While US drilling numbers increasing at a steady pace, this week increasing by another 12 rigs from last week’s increase of 26, others are simply waiting to get “back in” after they get a sense of market and oil price stability. OPEC should show some sense of worry, knowing that there was going to be a measured response against cuts.

US domestic oil output shows a sharp spike upwards

      US domestic oil output also showed a marked response on the heels of last week’s announced cuts. As predicted would happen, US domestic production increased by another 99,000 barrels a day just in the first five days after the announced cuts and the Saturday agreement between OPEC and non-OPEC producers.

      One would easily interpret that increase with an immediate impact on prices. While not an extremely large increase, it’s still early in the going. Expect to see more players to enter the market with oil up a rough $2 US on the week.

       The most likely reason for the spike in output was the simple fact that fields which had initially been shut down as a result of the June ’15 price collapse. With oil production hitting 9.6 million barrels that month, US domestic has just hit 8.797 million barrels a day since in comparison.

        But OPEC should be aware that there a re a lot of closed off spigots that can be turned on real quick if oil gets much higher.

         That’s it for this week, with all this coming from me with a “Merry Christmas” along with the “warmest” of holiday wishes!


George Murphy

Twitter @GeorgeMurphyOil

Wednesday, December 14, 2016

Price changes for Thursday, December 15, 2016

Hi to all,

Here's what I have for this week's price changes, keeping in mind that the winter blending may throw off Diesel and Heating/stove oils a little from the actual that may occur.

*Heating and stove oils show a drop of just 6/10ths of a cent/Litre....
*Diesel shows a drop of a penny, and...
*Gasoline shows a drop of 1.8 cents at the pumps.

Market highlights

US rig count shows an increase
     On the heels of OPEC and non-OPEC countries getting together in Vienna, Austria last week for their production cut meetings, those who joined in cuts should not be surprised to fins a very responsive US domestic oil industry begin to kick things into high gear.
     The US rig count, as I suspected, increased by double digits last week, with the US drilling industry adding 27 new rigs piercing grounds for oil.
     As the numbers suggest, that raises the stakes in a game of competition between US domestic production and it's ability to try and fill a gap in almost 1.8 million barrels in cuts by both OPEC and non-OPEC producers last week.
     Numbers on exactly how much oil will be added to US domestic production will probably keep increasing to a point that it could negate OPEC cuts.
     After all, it's not just the US that they have to worry about now.
Other countries left to the sidelines with the initial fall in oil, will also be quick to respond. Equador was another country left at a high water mark before prices fell, so it should be widely expected that others will respond in kind to a hole left in the markets for product.

I'll leave it at that for this week!


Twitter @GeorgeMurphyOil

Tuesday, December 06, 2016

Price changes for Thursday, December 8th, 2016... and OPEC commentary!

Hi to all,

Here's what I have for price changes now that the final numbers are in. As I thought, there was not much change from lasts evening's post.

*Heating and stove oils still show an increase of 4.5 cents a litre.
*Diesel fuel shows an increase of 4.9 cents a litre at the pumps, and...
*Gasoline shows an increase of 5.5 cents a litre coming this Thursday morning.

Market highlights

OPEC makes a deal
*In spite of the odds, OPEC members have signed a deal that cuts production between its members by a whole 1.2 million barrels, but as the news says today with oil, a lot of people still have their doubts and await proof that the deal will hold.
      While members of OPEC have signed on, the real proof will come with "compliance"- a vitally important factor in ensuring that OPEC itself still has the influence in the oil market that I still believe it has lost.
      Even though the deal has been delivered, latest figures from OPEC indicate that November month is one of the heaviest months that OPEC has produced oil, and all in spite of meeting over an agreed to cut. OPEC produced nearly 34.2 million barrels a day compared to 33.8 million barrels a day in October.
      Meanwhile, non-OPEC oil producing nations like Russia, will meet with OPEC tomorrow to discuss an arrangement to cut production as well. Russia produced 11.2 million barrels a day last month, the highest in thirty years.

Will oil hold? I don't think so...
*While OPEC members remain hopeful that prices will increase like they have, already sentiments against OPEC members not cheating are beginning to permeate the market with doubt. With a history of OPEC members cheating on their own quotas, and rivalries between Iraq, Iran and Saudi Arabia abounding, there is rank suspicion between members as well as an underlying distrust. Saudi Arabia and Iran face off against each other over a civil war in Yemen, while Iraq and Iran have ideological differences that stretch generations.
      Pare with that the idea that others await on the sidelines to step in where others have backed out, leaving some with "breathing space" and a chance to recover. OPEC had shale producers on the ropes, coming within a hair of knocking the US oil industry back to the 1990's where OPEC first went all out in flooding the oil markets, stripping the US of just about all of its market-share. Now frackers have been given the time to adjust, control costs and lower them in a lot of cases.
      The shalers will step in and US domestic response will be strong and pick up the loose ends. Other non-OPEC producers will smell an opportunity to recover lost share and will also respond. It will be hard for the Russians not to respond in kind.
      What has forced OPEC to flinch first will get them in the end. OPEC blinked when it became readily apparent that they themselves have gotten too used to the revenues garnered from oil resources. That's a lesson that everyone has failed to notice yet: in spite of OPEC oil producers being completely different in one context, they're really no different than any other corporation who has long tried to corner a market...then failed.

Call this a "commentary" this week!


George Murphy
Twitter @GeorgeMurphyOil