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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

Tuesday, November 29, 2016

Price changes for Thursday, December 1, 2016


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

Keep in mind that these numbers this time around for gasoline may be off a little from the actual the PUB may set, considering they picked up more volatility than my numbers did last week!

*Heating and stove oils show an increase of just 2/10ths of a cent a litre.
*Diesel shows an increase of 7/10ths and...
*Gasoline shows an added 1.5 cents a litre at the pumps.

*Don't be surprised if you see the PUB back down from last week's numbers. While I show an increase, it may be part of the volatility I missed out on LAST WEEK'S price change.

Market highlights

OPEC deal in doubt...Again
Russia remains non-committal in a production cut, while OPEC members Iraq and Iran are still holding their cards to their chests. Both Iran and Iraq want to reach their production limits before they institute any cut or freeze to production, while OPEC members Nigeria and Libya also want to be left out of any production cut the group may come up with at tomorrow's meeting.
      Interesting to watch, but oil has shown some pretty heavy volatility while OPEC itself tries to hammer out any deal.
     Also entering into market thinking is the possibility that US domestic production has shown some resiliency and may be quick to respond to "market needs" should a cut from OPEC come into play.

I'm going to leave it at that for now.

More tomorrow when the OPEC meeting breaks away.


George Murphy
Twitter @GeorgeMurphyOil

Wednesday, November 23, 2016

Price changes for Thursday, November 24th, 2016

Hi to all,

Here's what I have for this week's price changes, with all data in:

*Heating and stove oil show an increase of 2.0 cents per litre for Thursday....
*Diesel shows an added 2.6 cents a litre, and...
*Gasoline shows an increase of a penny a litre.

Market highlights

OPEC keeps talking
      OPEC members are seemingly coming close to an agreed set of cuts to production and that seems to have spurred prices for oil upwards over the last few days. But what I'm watching for is OPEC member compliance with a round of cuts that still makes me not believe that they ever will take hold and help support the price of oil.
      Consensus I am hearing is OPEC leaning toward a possible four to five percent cut in overall output that will bring OPEC total daily production down a rough 1.5 million barrels a day.
      If anything, oil prices may be supported for a very short timeframe, and that's when I believe two things will happen: US domestic production will kick in, and OPEC members will take advantage and cheat on those self-imposed cuts.
      Rumours in the markets have OPEC allowing fellow members Iraq and Iran to produce at present output and not cut production in order to have them sign on to a cuts agreement. The deal set to be signed at the next meeting of OPEC November 25th will be a "make or break" deal for the organisation and may be the hedge-point by which OPEC stands or falls.

I'll leave it at that for this week, but I'll be watching the oil news with much interest this weekend!

I'll keep you all up to date.


George Murphy
Twitter @GeorgeMurphyOil

Tuesday, November 15, 2016

Price changes for Thursday, November 17, 2016

Hi to all,
Here are the final numbers for this week's price changes:

*Heating and stove oil to drop by 9/10ths of a cent a litre....
*Diesel fuel to drop by 1.1 cents a litre, and...
*Gasoline to drop by 4.3 cents a litre.

Market highlights

OPEC swings the market

There's no doubt that while OPEC is losing some market influence, there's no doubt who carries the influence within the group itself.
     After a wild downward swing in oil yesterday, Saudi Arabia warned its fellow OPEC members that if they all didn't comply with a scheduled cut in production, it would again flood the markets with cheap oil by opening their own spigots, raising their own production levels to hit over eleven million barrels a day.
     With that threat, OPEC members are believed to be starting to fall in line with the idea of cuts to production and then the speculators moved in, pumping up oil prices today by over $2 US a barrel.
     Refined product prices also responded, moving upwards at the end of the day, but still not enough to stop predicted decreases to consumer prices here in Newfoundland and Labrador.
     Meetings between technical staff from member OPEC nations moved up their November 25th meetings to November 21st in response to the Saudi threat. That's nine days out from OPEC's regular meeting on cuts due to happen November 30th.

US domestic production continues to rise
For the fifth week in a row, US domestic production has increased again, this time by another 240,000 barrels a day in response to rising prices.
     Latest data seems to confirm that the shale industry has indeed started to get some measure of control over costs and have responded to the sensitivities of prices around $45 US in order to break even.
     Also to note here is what appears to me to be a sharp increase in a very short time. If OPEC cuts, look to the shale industry south of the border to respond in short order as well.

I'll leave it at that for this week...

Regards and pass the word on the numbers!

George Murphy
Twitter @GeorgeMurphyOil

Tuesday, November 08, 2016

Price changes for Thursday, November 10, 2016

Hi to all,

Here's what I have for this week's price changes, now that all the data is in...

A reminder: My heating, stove oil and Diesel numbers may be off somewhat due to winter blending! Use them as an indicator as to the direction these fuels could go, and not the actual that may occur.


*Heating and stove oils show a drop of 4.3 cents a litre.
*Diesel shows a drop of 4.0 cents a litre, and...
*Gasoline shows a drop of 1.4 cents a litre.


Colonial pipeline back online
Late Sunday saw the return of operation of the Colonial pipeline that resulted in a short-lived spike in gasoline prices on the New York Mercantile Exchange on Tuesday/Wednesday of last week. As soon as word was received that the disruption would not last that long, and that operations of the pipeline would re-start, spots ended up in a headlong retreat after rising close to four cents a litre in trading.
      Spot prices for gasoline have since returned to "pre-disruption" levels.

That's it for this week!


George Murphy
Twitter @GeorgeMurphyOil

Wednesday, November 02, 2016

Price changes for Thursday, November 3, 2016

Hi to all,

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

*Heating and stove oils to drop by 8/10ths of a cent per litre.
*Diesel to drop by an even penny, and...
*Gasoline shows a drop of just 6/10ths of a cent.

Market highlights

Another closure of the Columbian pipeline disrupts gasoline output

An explosion and fire has again closed the Colonial pipeline that runs from the US Gulf of Mexico refining and export areas to the US northeast, causing a sharp increase in gasoline spot prices on the New York mercantile exchange today that may not be felt by Newfoundland and Labrador consumers until they hit the pumps next week IF the line isn’t repaired soon.
    Before today, numbers showed a small decrease of a penny a litre, but the fire and explosion that took one life has resulted in a sharp increase in gasoline prices as a result of a “supply disruption”.
    “We’ll see how it goes in the markets over the next couple of days, but prices are already showing close to a four cent a litre increase could happen if today’s closing prices carry through the week”.
      Repairs are estimated to take until Saturday at the earliest to bring the line back into full operation again.

OPEC deal could fall apart?

OPEC’s deal to make a cut to production may already be under threat as Iran and now Iraq, are expressing dissatisfaction with having to institute cuts before they reach maximum “pre-war” production levels.
      That played into the markets this week allowing Brent prices to drop almost $3 US a barrel to close today at $47 and change.
       Speculators are also keeping in mind that the Saudi government is looking at raising cash through the sale of stock in the government owned Saudi Aramco oil company, saying the only reason why the Saudi’s wanted a freeze was to raise the share price and increase the government take.
       In the meantime, OPEC meets again at the end of this month to formally implement the limited production agreement.
       Food for thought...

That’s it for this week!


George Murphy
Twitter @GeorgeMurphyOil

Tuesday, October 25, 2016

Price changes for Thursday, October 27, 2016

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 1.1 cents a litre, and...
*Gasoline to increase by 1.2 cents a litre.

Market highlights
OPEC deal falling apart?

Already, there are internal rumblings from within OPEC on how members themselves will be able to keep any production cuts in place.
      OPEC member nation, Iran has been speaking out lately on the prospects of continuing to produce to maintain and increase lost market share from sanctions placed on the country back in 2008. While "joining" with members in signing on to cuts, they don't want to institute any cuts until they reach their previous 4.7 million barrel a day output. They still have a long way to go there yet, but I'm guessing that they're still about 900K barrels off the mark.

Canadian dollar tags consumers
The drop in the Canadian dollar this week connected to lower than expected economic growth, has hit consumers this week with the Loonie losing ground against its southern cousin, the US greenback.

     The Canadian dollar has lost nearly two cents against the US marker in the last three business days, costing consumers ironically 1.2 cents since last Wednesday's measure.

Bennett fiscal update this week has to "give back"...
Remember the provincial budget?
      That was the document that led to a massive increase in provincial road taxes that has cost consumers and businesses alike with lost spending power and lost disposable income to spend.
      It also increased the HST provincial take and increased your fuel prices a rough twenty cents a litre for every litre you bought.
      It was, in essence, the province's own carbon tax...
      But it's time to drop the tax back and even up the playing field again in Atlantic Canada with the latest increase in oil that has added close to $190 million into provincial coffers by the time the next budget rolls around.
     Why drop it back?
     Simple really...
     The price of oil has increased to almost $1 US over what was projected in the budget, successfully adding an estimated $295 million into provincial coffers when the next budget comes down.
     We have paid our fair share and it's time to cut the taxpayers, and business alike, a fair shake.

That's it for this week!

George Murphy
Twitter @GeorgeMurphyOil