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Thursday, December 03, 2020

Special post: Help coming for the offshore

There are challenges in the oil and gas industry that are not easily explained to those who don't watch industry events, but I've made it a habit of it to the point it is almost recreation for me. So, needless to say, I spent the last hour listening to the announcement this morning, so here's my take...

 

It's positive... 


But there are considerations here that people have to remember. We essentially have an industry that others, like OPEC, are struggling with to see what the next day brings.

  

Literally...Keep reading...

 

Today, for example, I'm reading news that OPEC is struggling with a worldwide crude oil over-supply of 900 million barrels, and an over-supply of an estimated 540 million barrels of refined products out there...

 

So, everything you see out there these days has all been caused by either OPEC and their price wars or are related to a Covid-19 shutdown. Simple supply and demand issues have literally collapsed an industry worldwide, and not just here. The needs of a people in search for a "cleaner, low carbon producing oil" are real, so we have an advantage in keeping ours going to market, while other dirtier, heavier crudes are left in the ground.

 

We have something to sell, but... 


Far be it for me to dictate the direction of an oil company. God knows they won't listen to me, but the province and the oil industry simply have no choice but to wait it out... 


So, today's announcement brings with it some hope for the future as the project known as "West White Rose" has not been completely abandoned...but remains in mothballs...as companies, including Huskey, grapple with the uncertainties of an oil future that is no clearer the closer to the end of the pandemic that we get... 


But, we need to grasp the realities too, that this is a changing world...rapidly changing...where our youth promote protection of the environment and look toward a future where alternative energies are used. All depends on a company's abilities to "respond" to the needs of the consumer out there, and we see changes with companies who are also changing their focus from oil and gas, to alternatives like solar and wind, hydrogen and the list goes on...If our youth are our future, and if we are to progress, then we and the oil industry itself have to conform to this change or we will be left behind.... 


That's why I place a lot of hope in the development of the technology industry/sector and projects like the Ocean supercluster...

 

This may very well be the last gravity-based structure that we will ever see in our lifetimes go into the deep, dark waters of the North Atlantic for the purpose of drilling for oil. There may be cheaper FPSO structures from now on before we see the change from using oil to something completely different. 

We may have to change the way we think about work locations like Argentia or Bull Arm...We may have to switch from the gravity-based structure for hauling oil out of the ground to construction of gravity-based structures for offshore wind projects instead. 


The world is changing, and it's all our responsibility to imagine it...to change with it...not against it...and welcome that change and the challenges that go along with it for all our collective futures. 

 

Regards, 


Tuesday, December 01, 2020

Price changes for Thursday, December 3rd, 2020

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 2.7 cents a litre.

*Diesel to increase by 2.9 cents a litre, and...

*Gasoline to increase by 2.9 cents a litre.

 

Market highlights

 

OPEC+ fails to meet in agreement on production cuts

OPEC and non-OPEC members met this week to try and reach a consensus in the maintenance of production cuts, but members of the group failed to reach an agreement so far on whether to maintain cuts to present production levels.

      Members on both sides expressed concerns that any addition to production would flood the markets with oil as the world economy has not started to recover from covid-related shutdowns and lower consumer spending.

      While some members wanted an extension to the cuts agreement that is due to expire in January, others worried about OPEC compliance. Russia wants to increase production starting in January by adding 500,000 barrels a day from OPEC+ agreement to put two million barrels a day back into the markets starting in January.

      OPEC+ meets again this Thursday to try and reach a consensus.

       Meanwhile, Norway has scheduled it’s oil industry to back into full production starting at the end of December, opening the prospects of OPEC reaction. The country shut down some production as a result of lower demand and a slump in prices earlier this year.

       Norway is not a member of the OPEC+ organisation and produces about 1.7 million barrels of oil per day.

 

Volkswagen actively looking...

Volkswagen is actively entering the electric vehicle markets again, this time with a new vehicle that will be marketed for less than most other EV’s at present.

     The company is in the development phase for an electric vehicle that will cost between $24,000 and $30,000 US.

     Tougher fuel standards and new stringent environmental regulations are turning the company towards the move, and ensuring that the company has entry into the consumer mass-market.

     In a presentation this past September, the new ID.4 SUV will be at a lower cost than the ID.3 model already on the market in September by the German company.

     Volkswagen said that the move would make EV’s about 60 percent of all its European vehicle sales by 2030.

     The ID.3 model’s largest market right now is in Norway where 60.8 percent of all new vehicle sales in October were of electric vehicles.

 

Everything is bigger...In Texas.

A company called Invenergy has announced it will begin construction of a large solar energy project it says will generate 1.8 gigawatts of electricity.

     The project already has companies lining up for the power, with telephone giant At&T lining up to purchase 500 megawatts of power, while Honda is buying another 200 megawatts.

      Several companies have already signed on to buy 100 megawatt or greater blocks of power. They include McDonald’s, Google and the city of Byron, Texas.

      The company has not disclosed how much they sold the power for.

 

US EIA inventory data

The latest Energy Information Administration inventory data is out, and crude stocks dropped by 800,000 barrels last week.

     Gasoline stocks reported a build of 2.2 million barrels, while distillates dropped 1.4 million barrels.

     Refiner capacity was reported at 78.7 percent.

     US domestic production was reported to be up another 100,000 barrels to sit at an even 11 million barrels per day, 1.9 million barrels less than a year ago for the same timeframe.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, November 24, 2020

Price changes for Thursday, November 26th, 2020

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 2.3 cents a litre.

*Diesel to increase by 2.6 cents a litre, and...

*Gasoline to increase by 1.5 cents a litre.

 

Market highlights

 

Covid-19 vaccines continue to power the markets

It’s all about “anticipated demand” as markets reacted heavily to more Covid-19 vaccine talk this week with the latest announcement by AstraZeneca.

     Oil responded as anticipated demand was seen with any vaccine availability with talk in the US that the vaccinations there could begin as soon as the first week in December.

 

Yellen as Biden’s Chair of the Federal Reserve

Joe Biden is not quite the US President yet, but his appointment of Janet Yellen as Chair of the Federal Reserve yesterday was also seen to power up the markets.

     Yellen was chair of the reserve appointed under Barrack Obama, but was not reappointed by Trump when her term expired in 2018. She headed up defense of the stimulus packages into the US economy during Obama’s tenure, so her appointment signals a possible return of a stimulus program in January to aid in any economic recovery.

 

Soon time to give back?

Watching spot prices this week made me turn my eyes back to March when markets collapsed and spot prices retreated on lower oil and demand from consumers.

     It may be slightly early, but spot prices are just five cents a litre lower than where they were “pre-collapse” in March for heating oil and six cents off the mark for gasoline.

      If I may be too presumptuous to ask, at what point do we as consumers get our money back from the approved increase given by the Public Utilities Board to carry NARL through this “crisis”? Surely, refining margins have improved markedly over the past two weeks, enough to “consider” a re-start of the refinery.

 

US inventory data

The latest inventory data shows yet another rare increase in oil inventories with crude stocks rising by 800,000 barrels.

     Gasoline increased by 2.6 million barrels, while distillates dropped 5.2 million barrels.

      Refiner capacity increased to 77.4 percent, up from last week.

      US domestic production was reported at 10.9 million barrels a day, up 400,000 barrels a day over the last week, possibly signalling a return of production.

       Although down by two rigs this past week, there were 310 rigs operating in North America, up from last month’s 293.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, November 17, 2020

Price changes for Thursday, November 19, 2020

 

Hi to all,

 

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

 

*Heating and stove oils to increase by 2.2 cents a litre.

*Diesel shows an increase of two cents even, and...

*Gasoline shows an increase of 1.7 cents a litre.

 

Market highlights

 

Covid-19 vaccines make an impact

Pfizer and Moderna both have announced what they call effective vaccines for Covid-19, helping to spur upwards movement for oil prices.

     Ironic as it is with huge outbreaks of the virus, markets were looking for some optimistic news and the announcements of the vaccines over the last week certainly were enough to give just some support to oil prices, while markets also still fought off the downturn of demand for fuels brought on by uncontrolled outbreaks of the virus worldwide.

 

Alternatives: Quebec announces the inevitable

Quebec made a huge announcement this week that will see the end of gasoline powered vehicles in that province by the end of 2035, just fifteen years away.

     The province joins California, Ireland, France, Britain, Belgium, Norway and Germany as countries who have all set deadlines to any fossil-fuelled new vehicle sales as those emerging markets see electric/battery powered vehicles as the way of the future.

     In Norway, almost seventy percent of new vehicle sales in September were of electric vehicles.

 

OPEC+ still talking output levels

OPEC and non-OPEC oil producing nations are still talking about production cuts and still discussing when they will put more oil onto the markets, even as they all see their world oil demand slipping.

      Their production cuts agreement was to see two million barrels of oil a day added to the markets starting in January 2021, but they are now in discussions ahead of next week’s OPEC+ meeting next week to come up with a new deadline three to six months further down the road as the world has yet to see any form of economic recovery as a result of Covid-19.

       Meanwhile, no doubt discussions will also include Libya, whose oil output has reached 1.2 million barrels a day from last month’s 250,000 as a result of a UN brokered peace deal between warring factions there.

 

US EIA inventories

The latest report from the Energy Information Administration has been released, and it shows an increase of 4.3 million barrels.

     Gasoline showed a drop of 2.3 million barrels, while distillates also dropped 5.4 million barrels.

      Refiner capacity was recorded at 74.5 percent.

      Domestic production was reported steady at 10.5 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, November 10, 2020

Price changes for Thursday, November 12th, 2020

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 1.8 cents a litre.

*Diesel fuel to increase by 2.2 cents a litre, and...

*Gasoline to increase by 1.4 cents a litre.

 

Market highlights

 

Pfizer’s treatment weighs

A new treatment for Covid-19 announced by Pfizer on Sunday helped power up oil and refined prices this week as the treatment, reported to be ninety percent effective, will allow for the economy to return to some form of normalcy sometime in the early part of the new year.

     Transportation-related industries like airlines and cruise companies saw stocks well up, and oil as well as refined up on future anticipated demand while the recovery happens.

      Oil prices rose sharply by $3.50 a barrel to sit at $43 US for Brent.

 

Biden win also raises oil-for now

A Biden win has also caused a rise with oil prices, with the industry more optimistic that the Biden presidency will bring in more regulations on fracking, and also turn attention to more alternatives.

     The fracking industry is what is behind the US meteoric increase in US domestic production of oil and gas, at least until the start of the pandemic.

 

Unique situation could develop for refiners

A unique situation where not enough refining will be available in the industry, leaving shortages of most fuels could develop in the North American markets if refineries stay closed even while the economy returns after covid-19.

     The US northeast has already lost well over 700,000 barrels a day of refinery production with at least four other refineries talking about possible closure if demand continues to falter. The latest refinery closure happened in Paulsboro, New Jersey last week.

      If the economy does recover quickly with the advent of the covid-19 vaccine, then demand could increase prices sharply to consumers, even though oil prices remain lower. However, any drop in demand from present levels may also continue with refinery closures.

     In a strategic sense, then it is easy to see why it may be really important to get a new operator for the North Atlantic facility in Placentia Bay.

 

US inventory data

The latest US EIA inventory data shows a drop in crude this week, losing eight million barrels. Gasoline was the only fuel to show an increase with 1.5 million barrels of stock added.

     Distillates dropped 1.6 million on 75.3 percent refiner capacity.

     US domestic production dropped 600,000 barrels to 10.5 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, November 03, 2020

Price changes for Thursday, November 5th, 2020

 

Hi to all,

 

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

 

*Heating and stove oils show a drop of a penny a litre.

*Diesel fuel shows a drop of 1.4 cents a litre, and...

*Gasoline shows a drop of 2.8 cents a litre.

 

Market highlights

 

More refineries pack it in

Three more refineries have shuttered this week, all reporting dropping demand and issues caused by alternatives and Covid-19’s onslaught.

    A refinery in Australia, Belgium and closer in New Jersey have all added their closures to a rapidly changing market.

    The Paulsboro, New Jersey refinery had a capacity of 180,000 barrels a day and will be converted to produce mostly lubricants and asphalt. Closures and reduced capacity has cost over 410,000 barrels of refining capacity between US east coast refiners during the Covid crisis and economic slowdown so far.

     PHB refiners also decided to dismantle a refinery with 330,000 barrel capacity in the wake of the world slowdown.

 

OPEC+ meets November 30th

OPEC and non-OPEC oil producing nations will meet again to discuss a potential extension to production cuts for another six months as the Coronavirus pandemic continues to impact demand and the recovery of the world economy.

     OPEC and other nations who agreed to output cuts some time ago were scheduled to add an additional 2 million barrels a day to the markets in January as part of the plan to remove a glut of supply of crude in the markets.

     In the meantime, Russia is bargaining with Saudi Arabia to extend the production cuts for three months instead of six months, ending the agreement in March, 2021 instead of January.

 

Libya production on the upswing

After a UN brokered agreement, Libyan oil production is back on the upswing, measuring 800,000 barrels a day over the last two weeks, and well up from the 250,000 barrels as measured last month. The OPEC member was faced with internal issues that saw a production shutdown as factions fought for control of oil exports.

     Libyan exports will add more oil to an already over-burdened market, putting some downwards pressure on Brent prices.

 

Alternatives:

Germany turning to more wind & Norway has too much electric

Norwegian hydroelectric production hit a point last week where they couldn’t put electricity into the grid, paying customers to consume the energy, while across the Denmark Strait, Germany has begun the road of adding at least 40 gigawatts of wind power to their grid by the year 2040.

      They presently have a total of 7.75 Gigawatts of wind-driven electricity capability, with more alternative energy being researched.

       According to RenewableUK, the wind energy industry worldwide has grown by 47 percent since January, and all in spite of the Covid crisis...

    

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, October 27, 2020

Price changes for Thursday, October 29th, 2020

 

Hi to all,

 

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

 

*Heating and stove oil to drop by 1.2 cents a litre.

*Diesel fuel to drop 1.5 cents a litre, and...

*Gasoline to drop by 1.6 cents a litre.

 

Market highlights

 

Covid drops oil again

Outbreaks worldwide of Covid-19 has again led to a oil price retreat the past few days as worldwide outbreaks have speculators worried about a drop in demand for oil and related refined products.

     Both Brent and WTI prices retreated about $2 US on covid fears.

     France has extended curfews and shut-ins to two thirds of its population  while Italy is also into an extended shut-in of its population. Other countries are considering shut-ins and closures which also affects the world oil price outlook.

 

Hurricane in the Gulf-again

Another hurricane is set to shut down oil production in the Gulf of Mexico again as tropical storm Zeta is projected to become Hurricane Zeta sometime today, or overnight.

     Hurricane Delta was successful in shutting in almost 90 percent of Gulf production, while Zeta has been projected to shut in close to the same amount, temporarily giving support to oil prices.

     Meanwhile, production had just been returning from Delta with the American Petroleum Institute reporting a crude oil build in the wake of the return of production.

 

NARL applies to the PUB for an increase

Papers have the tendency to be redacted these days...

Such is the case with North Atlantic Refining’s application for an increase in fuel prices after what it says where changes in the markets that have affected their operations and profitability.

     I had asked the PUB for information on the applied for increases, only to receive a redacted information for the increase with no information on the requested increase visible.

     Interesting to note that NARL and others received an allowable increase to wholesale and retail margins just this past July to their bottom line. That comes after an increase to margins in 2019 for heating fuels and propane.

     A quick look at the market news and information I have been able to attain out there is grim in some cases for most refined products as margins have been severely squeezed. That has led to some refinery closures worldwide and future closures to at least eleven more I have in Europe due to alternative energy policies and projected lower deamand.

 

US EIA inventory data

Crude oil inventories dropped by a million barrels last week, while gasoline inventories climbed 1.9 million barrels as demand was seen to slip with rising covid cases affecting it.

     Distillate inventories dropped 3.8 million barrels on lower refinery capacity of 72.9 percent.

     US domestic production was reported at 9.9 million barrels for the same timeframe that production was shut in the Gulf of Mexico.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil