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Tuesday, January 15, 2019

Price changes for Thursday, January 17th, 2019


Hi to all,



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



*Heating and stove oil to increase by 3.4 cents a litre.

*Diesel shows an increase of 3.6 cents a litre, and...

*Gasoline shows an increase of 6/10ths of a cent a litre.



Market highlights



Gasoline prices remain on the moderate side as inventories of crude oil still being soaked up by refiners churn out added gasoline stocks that simply aren’t being used. While refiners are enjoying good margins for distillates like Diesel and heating oils, they are also turning out gasoline that for the moment faces no demand pressures like the distillates do. Gasoline spot prices have remained almost steady to a couple of tenths as inventories show lots on hand in the low demand season.

     Margins are also healthy as new regulations around distillate fuels will be coming into force in 2020 as rules around sulphur content take hold. As these new regulations take hold for all distillate users, some are saying there could be a market shortfall of distillate fuels that will increase it’s value as 2020 gets closer, and that is also part reason why we’re seeing elevated prices for those fuels.



U.S inventories

Inventories meanwhile, also are enjoying the upside as gasoline gained 8.1 million barrels in the latest U.S Energy Information Administration report last Wednesday. Refiner capacity remained well above 96 percent and distillates also saw a massive gain of 10 million barrels.

     U.S domestic production increased again, but this time by a barely noticeable two thousand barrels a day, so essentially remaining close to 11.7 million barrels a day.

     The U.S rig count also dropped by seven rigs as the possibility of lower oil prices may be taking a bite out of working rigs. There are 1138 rigs operating in the U.S up to January 10th.



That’s it for this week!



Regards,



George Murphy

Twitter: @GeorgeMurphyOil

Tuesday, January 08, 2019

Price changes for Thursday, January 10th, 2019


Hi to all,



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

Distillate prices are subject to “winter blending” so they could potentially be off slightly.



*Heating and stove oils to increase by 1.9 cents a litre.

*Diesel fuel to increase by 2.1 cents a litre, and...

*Gasoline to increase by just 6/10ths of a cent a litre.



Market highlights



Oil rises for the first week of 2019

It is usual for market speculators to look at the first five days of any New Year and make predictions that the year in question will be a good one.

     If that is the case, then the first five days of trading this year may be an indicator that oil prices will rebound somewhat, probably to within OPEC’s target range of $70 US a barrel.

     With oil rising for the first five days, market speculators have sensed that OPEC’s round of cuts will soon take hold and are seeing the December cut in production as being positive for rising oil.

     Markets responded positively to news that OPEC members successfully lowered production by 530,000 barrels a day for the month of December.



Canadian dollar rises

The Canadian dollar increased roughly  three cents against the U.S greenback over the last nine days with the dollar trading at $1.3638U.S on the 28th of December to today’s $1.3293.

      With the rise in the dollar, consumers gained a little with refined product prices. For each penny the Canadian dollar gains, the rough equivalent of close on three quarters to a full penny is saved by consumers.



U.S inventories tell a story

U.S refiners may be looking at adding more refiner capacity just to “soak up” added oil inventories in recent weeks.

     With crude inventories expanding to 441 million barrels in the U.S, almost eight percentage points over their own five year averages, refiners have turned up production to try to bring the crude levels down.

     But are they succeeding in supporting prices?

     While oil prices have increased, West Texas Intermediate prices have not increased at the same rate as Brent prices, with the differential between the two expanding by $4 US with Brent rising faster than WTI.

     Refiners are left in a quandary, that if they can’t export enough to the outside, then they are left to try to refine it to remove it from inventory.

     The problem they have this week in the numbers is that, while crude inventories remained steady, gasoline showed a massive gain of 6.9 million barrels, while distillates showed an increase of 9.5 million barrels. Another such build as this week showed, anything else added may complicate inventories as a consideration to the sell price to the end user in spite of rising oil, and that squeezes margins.

     Refiner capacity was recorded at 97.2 percent with the data for the week up to December 28th.

      U.S domestic oil production also remained steady through the Christmas holidays at 11.7 million barrels a day.



      That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, December 18, 2018

Price changes for Thursday, December 20th, 2018


Hi to all,



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

Keep in mind winter blending as that mix may throw off the distillate numbers somewhat, and also that there is EXTREME volatility in the numbers that could be pointing the numbers lower than what I have here now.



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

*Diesel fuel shows a drop of 9/10ths of a cent, and...

*Gasoline shows a drop of 1.3 cents a litre.



Market highlights



OPEC cuts ineffective?

Talks of a slowing world economy not only sent the stock markets into a volatile condition the last few days, but oil is also starting to pay the price on a possible slowdown.

     With less demand for oil in a slowing economy, the prospects of absorbing a glut worldwide is becoming doubtful. Growing shale production in the U.S has seeded doubts that oil prices will have support as more oil is seen to be added to the markets. The last two days have seen oil retreat  with even refined prices starting to trade much lower right along with it, possibly to reflected at the pumps over the next two weeks.

      The likelihood of cuts being effective is also being outweighed by word from Russia that oil production has increased there, even with the word that the country was keen to join OPEC in making their last round of cuts to oil production.



API inventories up

The American Petroleum Institute also released their inventory data late this evening that also showed a moderate build of 3.5 million barrels in overall U.S crude inventories, along with building inventories in Cushing, Oklahoma where West Texas Intermediate is traded. Oil was up there by just over a million.

      Inventories of gasoline were also said to be up just over 1.7 million barrels nationwide.

      All eyes will be on the Energy Information Administration inventory report due shortly after 12:30PM NST for further word on oil inventory, as well as any growth in U.S domestic production figures.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, December 11, 2018

Price changes for Thursday, December 13th, 2018


Hi to all,



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

ALL DATA IS IN, SO THERE WON’T BE A NEED FOR A WEDNESDAY UPDATE.



*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 by an even penny.



Market highlights



OPEC+ (Plus) institutes production cut

Both OPEC and non-OPEC members, otherwise known as OPEC+ have agreed as of Friday past, to institute a round of production cuts that amounts to a little over a million barrels a day with OPEC absorbing about 800,000 barrels of that.

     The agreement between the two groups is for six months and totals close to 1.2 million barrels.

     Exempt from making any cuts are Venezuela, Iran and Libya who are all under production pressures, but Iran having been placed under sanction by the U.S and other counties.



Canadian dollar loses ground

The Canadian dollar lost more ground against the US dollar over the last week losing about two cents against it’s southern counterpart.

      Weakness in resource prices like oil is mostly to blame, but a busy U.S economy also figures into the equation.



Expect market instability

Markets will be shaky the next few weeks and months as markets weigh evidence that the cuts will have some sort of positive impacts on prices, but there are a couple of other factors worth watching.

     A worldwide economic slowdown is seen as being on its way as stock markets have shown. Lower than estimated returns have spurred the thought that there has been some downturn in demand and that has been reinforced with OPEC making cuts to what some believe as an “over-supplied” oil market.

     A tit-for-tat spat between the US and China continues, even though a 90 day truce was agreed upon early on Saturday as both countries try to find a solution to their trade issues. Tariffs placed on Chinese goods were enough to bare watching as a slowdown in the Chinese economy is said to be starting. However, late news this evening includes a telltale sign that China may not be hurting as much as first thought as imports of oil in November hit ten million barrels a day for the first time ever.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

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709.685.6186 cellular

Tuesday, December 04, 2018

Price changes for Thursday, December 6th, 2018


Hi to all,



Here’s what I have for this week’s price changes. Keep in mind that the distillate fuels are subject to winter blending, so they may be off slightly.



*Heating and stove oils to drop by 2.4 cents a litre.

*Diesel fuel to drop by 2.5 cents a litre, and...

*Gasoline to drop by 8/10ths of a cent a litre.



These numbers will be adjusted again via social media Wednesday morning when the last data-point becomes available.



Market highlights



Alberta and OPEC both to cut production

In what some may think to be an unusual move, Alberta will do as OPEC countries have long been doing to support prices from time to time. For the first time I can think of, Alberta will cut back oil production by 325,000 barrels a day in order to try and support prices for their land-locked oil resources.

     By limiting production by 8.5 percent, the Notley government is hoping that the price for Alberta crude oils will rise, thus increasing their revenue take and helping to keep Alberta fields working.

     Meanwhile, in the Middle East, and after the G20 meetings in Argentina, both Saudi Arabia, other OPEC members and Russia are talking about an initial production cut of 1.3 million barrels a day. But latest talk out of the Middle East is signaling that cut may be reduced to a million barrels a day as Alberta has taken over 325,000 thus making OPEC think twice about cuts that were to be brought in.

      We’ll find out later this week exactly how much OPEC will cut production by later this week when OPEC meets again in Vienna.

    

US-China trade war ceasefire

The US and China have signaled their intent to call a 90 day ceasefire in their trade war in an attempt to reach an agreement on the imposition of tariffs on goods manufactured in China.

      The Chinese were countering the tariff call by the US with a call for a twenty five percent tariff on imports of U.S crude. While oil increased in price just a little, it has since flattened out on doubts an agreement could be reached.

      Concerns over oil prices arose with the possibility of Chinese economic troubles had tariffs been placed on Chinese goods and oil fell appreciably as a result. Mind you, Trump has said that placing major tariffs on China remained a possibility if the US doesn’t achieve what it believes to be a fair deal on trade and



Global economic slowdown on the way?

Concerns over a global economic slowdown continues to weigh against oil again today as some companies continue to report lower than expected earnings.

      The issues of lower earnings seem to rise every few days in the markets and that weighs against oil as demand is seen to possibly slip with any worldwide slowdown.



Crude averages for this year so far

Merrill Lynch is reporting that the average price for Brent so far this year is $72.80 a barrel, while West Texas Intermediate coming in at $66.10 a barrel US.

      Brent has averaged $72.86 a barrel between April 1st and the end of October according to my numbers.

      Pretty close!

      The province has said it thinks Brent will average $74 US a barrel for this fiscal year.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, November 27, 2018

Trump taking credit for lower oil? You're kidding, right? Price changes for Thursday, November 29th, 2018


Hi to all,



Here’s what I have for this Thursday’s price changes. Keep in mind that these numbers will be updated to contain Tuesday data in the final numbers. Also, distillate fuels like heating, stove oil and Diesel may be off slightly due to winter blending.



*Heating and stove oils show a drop of 5.2 cents a litre.

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

*Gasoline shows a drop of 3.2 cents a litre.



Market highlights



Trump tries to take credit for lower prices

     Donald Trump is trying to take credit for lower prices, but the reality of his words may come back to haunt him.

     Why?

     Well, the lower that oil prices go south of the border, the more likely he is to damage the growth in U.S domestic production!

      For some time now, growth in the shale fields was based simply on more money earned for a higher oil price, so lots of junior producers and some majors went back to the drilling fields and domestic production blossomed right along with it.

      But now that oil prices are slipping, the prospect of better profit margins is slipping away. Some may be taking that sober second thought about entering the energy field while such insecurity reigns. And the Saudi’s and OPEC may be quick to lash out.

      Will he be so quick to take credit if the markets collapse again?



Saudi Arabia and OPEC worried?

       While oil prices have been slipping, the prospect of lower revenues to Middle Eastern exporters again is coming into focus with most of that pointing directly at Saudi Arabia, who have to be worried that unrest again will bring unease within its borders as happened in 2014.

      The last time prices collapsed, the Kingdom was left with much lower revenues and was forced to cut back on some major programming, and faced a larger than usual problem of keeping everyone happy who had been drawing from the kingdom’s riches.

       If the Saudi’s and OPEC, in concert with Russia, decide to cut production, it could have the reverse effect and open the markets to the whims of growing U.S domestic production, thus complicating their end desired result.

       If they maintain present levels, the markets may see it as over-production and that would likely send oil lower causing grief within its borders.



Demand lower?

      Trump’s tariff war against China is helping to send oil prices lower.

      As the prospect of an economic slowdown as a result of tariffs on goods from China into the U.S grows, the promise of lower oil use in China, the world’s second largest consumer, is also weighing on the markets.

      In the meantime, U.S inventories reported a build in crude oil inventory in spite of an increase in refiner capacity.

      Distillate inventories were also down, but less than expected and gasoline inventories reported a drop of just shy of 1.3 million barrels.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil   

Tuesday, November 20, 2018

Price changes for Thursday, November 20, 2018


Hi to all,



Here’s what I have for price changes for this week. Keep in mind that these numbers will be updated by 10:00AM tomorrow.



*Heating and stove oils show a drop of 2.4 cents a litre.

*Diesel fuel shows a drop of 2.5 cents a litre, and...

*Gasoline shows a drop of 2.2 cents a litre.



Market highlights



OPEC meets in December

OPEC will meet the first week of December to discuss measures to help support the price of oil from falling further.

     Those measures may include a more extensive cut by a million barrels a day by OPEC members to help support prices. Saudi Arabia, just two weeks ago, stepped into the falling price issue and announced they would curtail exports by 500,000 barrels a day, a move that wasn’t seen by market analysts as being enough to help.



Oil falls further on earnings and economic reports

Oil prices fell almost seven percentage points again today as lower than expected earnings reports signalled a world economic slowdown was in the works.

     Any economic slowdown also sees demand for crude oil drop along with it, part reason why the panic sell-off was on again in the markets today.



Oil inventories up

Oil prices weren’t helped any this past week as inventories were up, according to the Energy Information Administration’s inventory report.

      Inventories of crude oil were up again, this time by 10.3 million barrels against an expectation of 2.2 million barrels.

      Gasoline inventories were down by 1.4 million barrels, while distillate inventories dipped by 3.6 million barrels.

      Refiner capacity was measured at 90.1 percent as refineries were mostly down for winter switchovers and maintenance. This was not seen as an issue with prices as, when capacity picks up, inventories of refined products would be in better shape than what was shown this past week.

     The next inventory report is due Wednesday from the EIA.



     That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil