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Tuesday, August 04, 2020

Price changes for Thursday, August 6th, 2020

Hi to all,

 

Here’s what I have for price changes for this Thursday, August 6th, 2020...

 

*Heating, stove oil and Diesel all show a drop of 1.1 cents a litre, and...

*Gasoline shows a drop of 3 cents a litre.

 

Market highlights

 

Covid continues to choke demand

Just when they thought it was safe to go back to their drill bits...

    News of any potential increase in oil prices continues to be tempered by continuing outbreaks of Covid-19 worldwide, especially in the United States as Covid-19 seems to be a huge factor in any economic recovery.

    Word of several outbreaks in Australia, Germany, Spain and the US continues to keep a hold of any meteoric rise in oil prices and demand for most distillates as well as gasoline, has been flattened.

     And with the end of summer coming quick, further drops in demand for transportation fuels, including gasoline, is highly likely.

 

Early winter outlook

With the summer drawing to a close for some, bets on gasoline by speculators usually switches to distillates, like heating oil as the fall and winter seasons contracts approach.

     The colder the weather, the more demand for distillates.

    A look at the data shows heating and stove oil spot prices a rather tidy 13 cents a litre lower than the same timeframe for last year, and if oil prices remaining relatively flat over the next few months, then consumers can expect to pay up to 79 cents a litre, down from the 92.9 they paid at peak winter pricing last year in the immediate St. John’s area.

     However, with Covid-19 holding the possibility of further shutdowns in the future that may keep everyone close to home, demand may increase to close that gap between this year and last year’s pricing.

     I’ll continue to keep an eye to it all!

 

US inventory data

The Energy Information Administration’s latest inventory data is out, and it shows a drop of 10.6 million barrels, leaving inventories of crude a full 17 percent above last years levels.

     Gasoline showed an increase of 700,000 barrels, while distillates were also reported up slightly, but by 500,000 barrels.

     Refiner capacity was recorded at 79.5 percent.

     US domestic production remained steady at 11.1 million barrels a day.

     The Baker-Hughes rig count remained at 251 operating rigs, but down from the 946 that were operating at the same time last year, a drop of close to 75 percent.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  


Tuesday, July 28, 2020

Price changes for Thursday, July 30th, 2020


Hi to all,

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

*Heating and stove oils to increase by 4/10ths of a cent/Litre.
*Diesel shows an increase of 3/10ths of a cent a litre, and...
*Gasoline shows an increase of 1.1 cents a litre.

Market Highlights

Rise in Covid counters any price increases
The news this past few days has been centered around the rise in Covid-19 cases worldwide as Covid fatigue has sparked a new round of cases that has speculators worrying over the effect on demand for refined product.
     With new cases rising in Spain and Australia, besides what’s been happening in the US, concerns for any further increase in crude prices remain in doubt as demand is seen to be hit.
    Oil prices have been mostly steady with refined product prices remaining where they have been over the past three weeks now as Covid numbers have been rising steady in recent weeks.

US EIA inventory data
US crude oil inventories increased up to the week of July 17th, adding 4.9 million barrels to present stocks.
     Gasoline inventories dropped by 1.8 million barrels, while distillates increased by 1.1 million barrels.
     Refiner capacity was recorded at 77.9 percent.
     Meanwhile, also buried deep in the data, some reason why I think prices will remain fairly steady at $40 to $43 US for Brent for the time being.
     The same inventory report for last week also showed an important increase in US domestic production, which increased 100,000 barrels, rising from 11 million barrels a day to 11.1 million barrels.
     If this is any important notification, then it shows that according to the timeline, US shale drillers can survive at $38 US, and some spigots are quick to turn back on to take advantage of rising oil prices.
     Also, after a long series of drops in overall US rig counts, the report for last week from Baker Hughes, showed an increase of but ONE rig getting back to work in the oil patch. If that trend upwards shows this next week, then expect there to be some spark to keep it playing in the oil markets to mitigate any further increase in Crude oil.

Canadian dollar gains ground
The Canadian dollar has increased in recent days, rising from $1.36 Canadian against the greenback on July 16th, to today’s $1.337 Tuesday noon.
     The increase in the dollar has mitigated further any increases for the week as a higher dollar tends to benefit Canadian consumers against US prices.

That’s it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil  

Tuesday, July 21, 2020

Price changes for Thursday, July 23rd, 2020


Hi to all,

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

*Heating and stove oil to drop by 1/10th of a cent a litre.
*Diesel shows no change in price, and...
*Gasoline shows a drop of 1.5 cents a litre.

Market highlights

Corona vaccine holds promise for higher oil
With oil prices hanging around $40 US a barrel, and slightly higher for Brent, word of a possible break in the search for a vaccine for the Corona virus sent oil prices higher today as optimism around a possible rebound in oil demand came with the prospects of a cure.
     Word comes from Oxford University in England over the possible vaccine.
     Anticipated demand would rise as the treatment for the virus would re-open economies worldwide, and demand for oil  and refined products would increase along with it.

China purchases down sharply
Last month, I told you all about a huge increase in purchases of oil by Chinese oil companies that helped to increase prices to present levels.
     Now comes the downside...
     Latest figures seem to indicate that China has cut back purchases of oil off the open markets as late as May with that month’s import figures showing a 22 percent drop in imports into the Asian country.
     One of two things here that may be affecting purchases: either storage is just about filled up, or secondly, even though they may have been refining it, there seems to be no markets for the refined product as Covid-19 still reigns worldwide-for now.

Eyes to the markets
With oil rising, and the prospects for a cure driving the latest round of price increases, shale producers may be starting to think about turning the taps back on to recoup losses from the extended shutdown due to Covid-19 and the economic closure brought along by it.
     The break-even point appears to be close to $40 WTI for shalers as the numbers of rigs being taken offline has decreased sharply. Only two rigs came offline last week.
      It may be time to watch US domestic figures as well that were just 1.3 million barrels a day less than what was produced for the same time last year, being 12.3 million barrels a day last July.

US EIA inventories
The latest EIA inventory report shows a 7.5 million barrel draw in crude oil inventories, while gasoline supplies also dropped 3.1 million barrels.
     Distillates were also down by 453 thousand barrels.
     Refiner capacity was recorded at 78.1 percent.
     US domestic output was recorded at 11 million barrels a day.

That’s it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil  

Tuesday, July 14, 2020

Price changes for Thursday, July 16th, 2020


Hi to all,

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

*Heating, stove oil and Diesel all show no changes to prices this week.
*Gasoline shows an increase of 8/10ths of a cent a litre.

Market highlights

OPEC meets this week
OPEC members will meet again tomorrow to discuss a partial lifting of cuts that are scheduled to be lifted as some countries economies open up again.
     OPEC cuts were supposed to ease somewhat at the start of August, going from 9.7 million barrels a day to 7.7 million barrels a day. The move is anticipated as OPEC does not want to cause any alarming fall in the price of crude, nor does it want to cause any harm to any economic recovery that may be underway.
     At the same time, OPEC members need the revenue, so there is still support for prices to be sustained over $40 US a barrel to help top up lost revenues.
     Meanwhile, new data from OPEC is showing there was stronger than usual compliance with production cuts in June month with numbers showing OPEC members actually cut 10.5 million barrels a day, well over the 9.7 million members had agreed to.

Chinese storage drying up quickly
Those readers of the update will recall just two weeks ago that I reported that data out of China indicated they were buying low and filling strategic reserves. Further to this, tanker traffic has become backlogged with unloading not going off as planned, another strong indicator of just how fast Chinese storage capacity has filled up.
      Information at that time showed China buying more than two million barrels a day more than what consumption figures were showing, ironically a figure being discussed by OPEC as the total they will throw into the markets.
      If Chinese storage does fill up, and offloading ceases in Asia, the  we may have another problem starting where, in addition to a partial lifting of cuts, plus waning China purchases, could put 4 million barrels of crude a day back onto the oil markets again.

US inventory data
The latest US EIA inventory data is out, and crude oil added 5.7 million barrels of crude to US supplies.
     Gasoline dropped 4.8 million barrels, while distillates added 3.1 million barrels on 77.5 percent refiner capacity.
     US domestic production was reported at 11 million barrels a day for the third week in a row, indicating a steady output with prices averaging $40 US a barrel.

That’s it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil  

Tuesday, July 07, 2020

Price changes for Thursday, July 9th, 2020


Hi to all,

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

*Heating and stove oils to increase by 2.7 cents a litre.
*Diesel shows an increase of 2.9 cents a litre, and...
*Gasoline shows an increase of 3 cents a litre.

Market highlights

OPEC production drops again
OPEC production figures are out and, once again there are signs of strong compliance amongst OPEC members.
     Total OPEC production was measured at 22.6 million barrels a day in June, down a good 9.5 million barrels per day after OPEC and OPEC+ members agreed to cuts just two months ago.
     Saudi Arabian production was recorded at 7.53 million barrels a day for the same month.
      Venezuela production, by comparison, was just 360,000 barrels a day.
     Overall, OPEC production is down to levels not seen since the 1991 Gulf War.

Gasoline demand on shaky ground?
While gasoline may be pointing up this week, some signs are starting to appear that may start to point gasoline prices down again.
     With rising cases of Covid-19 starting re-emerge in the US with the opening of the economy, along with holiday and summer get-togethers, gasoline demand is seen to be taking a hit in the coming days and weeks as hospitalisations and stay at home orders start taking effect again as some areas shut down again.
     Areas like Florida, Arizona and California have rising cases in recent days that are leading to second shutdowns of local economies.

EIA inventories
The latest inventory data is out, and crude oil continues to show further drops in stocks with crude dropping 7.2 million barrels.
     Gasoline inventories gained 1.2 million barrels, while distillates dropped 600,000 barrels.
     US domestic production was reported at 11 million barrels a day, no change from the week previous as it seems increased oil prices has given some support to shale producers.
     Refiner capacity was reported at 75.5 percent.
     Meanwhile, the Baker Hughes rig count shows 263 rigs operating in oil and gas fields south of the border, down an even 700 rigs for the same time period last year.

That’s it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil  

Tuesday, June 30, 2020

Price changes for Thursday, July 2, 2020


Hi to all,

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

*Heating and stove oil to drop 1.8 cents a litre.
*Diesel showing a drop of 2 cents a litre, and...
*Gasoline to drop by 3.5 cents a litre.

Market highlights

Covid-19 announces its presence
For those south of the border who thought it was safe to open the economy again, we have news for you.
     Covid-19 wasn’t going away.
     Numbers of cases of the disease started to increase again in areas such as Arizona, California and Florida at a time when they thought it was safe to open a short time ago.
     Early openings have helped to spread the disease, and doubts about increasing demand of fuels riding on those hopes soon were dashed with both oil and refined commodities beating a retreat that might not stop if Anthony Fauci is right.
    Fauci, the US’s top doc and Covid-19 handler, projects as many as 100,000 extra cases of Covid-19 to wave over the US if measures to stop the disease soon aren’t taken in at least 32 US states.
    The possibility of a demand crash, at least in the US, will temper any gains made with oil. European Union countries have gained some semblance of control over the disease, so that might temper any drop in oil.

US inventories
The Energy Information Administration’s latest read on inventories is out, showing a gain in crude inventories of 1.4 million barrels.
      Gasoline stocks were down by 1.7 million and distillates up by 249 thousand barrels.
      Refiner capacity was reported up to 74.6 percent of capacity, a slight increase from the week previous.
      US domestic production was reported at 11 million barrels a day, an increase of 500 thousand barrels, and 1.1 million barrels lower than for the same timeframe last year.

Start watching your electricity bill
It will hit sometime this month...
     Last year, when I questioned Nalcor’s oil price estimates for electrical generation of $106 a barrel Canadian, I never did get an answer and suggested that it would be way off and that Nalcor should revisit the increase to electrical consumers based on the well-off estimates.
     I was proven right.
     The present government saw fit to have Nalcor revisit those numbers, lowering oil prices for electrical generation down to average $51 a barrel instead. The balance will be returned to consumers in the form of a one-time rebate in July/August.
    The amount everyone receives back as a credit will be based on overall electrical consumption.
    Again, being July, I am again looking forward to find out what Nalcor’s estimates for the price of oil for electrical generation will be in their “application” to the Public Utilities Board, but I will again question the estimates they come up with.
    Present day prices are hanging around $55 a barrel Canadian.

That’s it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil  

Tuesday, June 23, 2020

Price changes for Thursday, June 25th, 2020


Hi to all,



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



*Heating and stove oil to increase by 3 cents a litre.

*Diesel fuel shows a 3.3 cent a litre increase, and...

*Gasoline shows an increase of 4.9 cents a litre.



Market highlights



OPEC+ cuts start to bite

OPEC is finally getting serious about production cuts with member compliance reaching 88 percent during the month of May. That’s a stark change in the data that showed most member nations were doing much less on compliance.

      The latest numbers will be used to inform OPEC’s Joint Ministerial Monitoring Committee which now oversees OPEC members and their compliance at their next meeting July 15th to gauge how much more to cut from production, if anything.



Canada getting hit hard

Over 1.1 million barrels of crude output has been shut in since the collapse in crude prices according to Oilprice.com. The story says Canada’s output of 3.5 million barrels a day in 2019 has taken a hit mainly from train exports in Alberta where crude oil shipments have dropped from 450 thousand barrels a day to just a shade over 150 thousand per day.

    The hard shutdown is also responsible for capacity issues in the pipeline export system with there being “plenty of room” for the export of crude oil to southern or western markets.



US inventory data

US crude oil inventories were recorded up marginally by 1.2 million barrels over the past week, while gasoline inventories were down on increased demand by 1.7 million barrels.

     Distillates were also down, but by 1.4 million barrels.

     Refiner capacity was measured at 73.8 percent.

     US domestic out put took another downwards hit, losing another 600,000 barrels a day of production to sit at 10.5 million barrels a day from the January high of 13.5 million barrels.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil