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Tuesday, March 21, 2017

Price changes for Thursday, March 23, 2017


Hi to all,



Short and sweet, here's what I have for this week's price changes:



*Heating & stove oils show a drop of 4/10ths of a cent a litre.

*Diesel fuel shows a drop of 7/10ths of a cent a litre, and...

*Gasoline shows no change in price this week.



Market highlights



API report shows another inventory gain

     While not my source of inventory news that influences my way of thinking, new numbers from the American Petroleum Institute shows another increase in crude oil supply, this time by 4.5 million barrels a day

     Gasoline showed a drop in inventories of 4.9 million barrels, while distillate supplies dropped just over 800 thousand barrels.



Canadian dollar steady

     Up to three days ago, the dollar remained steady against the US greenback, but gained almost a penny against its US cousin in the latter half of the week.

     Oil, in the meantime, lost a dollar US this past pricing session.

     Brent was priced at $40.67 a barrel March 21st last year.



Upcoming provincial budget

     With oil prices close to $51 US a barrel Brent right now, it is obvious that the government will show some added revenue from oil royalties.

     It may be wishful thinking, but it may be time for the government to roll back the heavy increase that was levied onto gas taxes, if only just in part. While government may have thought it "prudent" to increase taxes, it became heavy-handed to levy an added 16.5 cents in added gasoline tax.

     Additional taxes resulted in an increased take as well from HST with the result being a twenty cent a litre hit at the pumps.

     We all could use the break!



That's it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, March 14, 2017

Price changes for Thursday, March 16, 2017


Hi to all,



Here’s what I have for this week’s price changes, baring in mind that winter blending mat throw off the distillate numbers slightly from the actual that may occur.



*Heating and stove oils show a drop of 3.1 cents a litre.

*Diesel shows a drop of 3 cents a litre, and...

*Gasoline shows a drop of just 2/10ths of a cent a litre.



Market highlights



Focus off distillate turning to gasoline

     If you were a speculator in the distillate market, you didn’t make a pile of money, but you didn’t really lose either. Both ways you look at it, prices were moderate, even to some consumers.

     But it’s time to pull out now, and as you do, you turn to the gasoline markets where, hopefully, you’ll see a rise in demand as spring and early summer comes on.

     So, while consumers should start to see some expected drops in distillate prices here into the summer, those same consumers begin to see some support for gasoline: just part of the reason why no big drop in the gasoline markets this week.

     But don’t expect too much pressure yet, mind you!

     Until consumers see an uptick in demand, expect no immediate growth in gasoline prices this summer. With near-record inventories of gasoline out there this spring ahead of the switch-over from distillate to gasoline, there’s going to be reason for concern for refiners and Big Oil when refineries begin turning out more gasoline for consumption.

     What’s bad for them though, is not necessarily a bad thing for consumers...



OPEC blinks

     OPEC member Saudi Arabia reported today that they secretly increased production upwards from January adding another 260,000 barrels a day to production.

     The Saudi’s produced 10.1 million barrels a day, from 9.8 million barrels a day in January.

     Now, if I were a betting man, I’d put my money on one simple reason: That U.S shale has become a bigger influence on OPEC oil policy than anyone realised. My guess is that, adding a little oil to the markets is an attempt to “taper off” US growth in domestic oil and still allow them to survive.

     It’s a “warning”...

     What OPEC does in the next two months will be determined by what U.S domestic in the next two weeks with domestic production figures when they are released by the US Energy Information Administration.



     That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Wednesday, March 08, 2017

Price changes for Thursday, March 9, 2017


Hi to all,



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



*Heating and stove oil to drop by 6/10ths of a cent a litre.

*Diesel fuel to drop by 7/10ths of a cent, and...

*Gasoline to drop by 1.6 cents a litre.



Market highlights



API reports another huge crude inventory build

The American Petroleum Institute recorded yet another huge inventory build, with crude oil stocks growing another 11.6 million barrels to the domestic stockpile.

     Gasoline inventories were reported down in excess of five million barrels, while distillate stocks were also down by 2.9 million barrels.

      All eyes will be on the US Energy Information Administration’s report due to be released around noon Newfoundland time.



OPEC meeting in May

While it’s a long way away yet, it could be the key date that signifies whether OPEC’s member states will carry forth with production cuts, or whether they will answer to the massive growth in U.S domestic production. The US Energy Information Administration is already predicting that US domestic will hit 9.7 million by the end of fiscal 2018. The US has already added half of the total cuts made by OPEC since the end of November and could set itself up to meeting the 1.2 million gain in domestic production within the next four months if oil stays close to $55 US a barrel.

     Question to be answered in May then? Will US domestic production spark OPEC members into opening the floodgates to knock US production again, or does OPEC answer with more cuts?

      For now, it’s “wait and see”.



     That’s it from me this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, February 28, 2017

Price changes for Thursday, March 2, 2017

Hi to all,

Here's what I have for this week's price changes. Keep in mind winter blending that may throw off the numbers a little.

*Heating/stove oils show an added 7/10ths of a cent a litre....
*Diesel shows an increase of a penny a litre, and...
*Gasoline shows an increase of 8/10ths of a cent a litre.


Market highlights

US rig count continues upwards
      With the cuts instituted by OPEC and non-OPEC producers at the end of November 2016, along with it came the promise of small shale producers in the US and elsewhere getting back into the market.
      And get back they did, and at such a pace that OPEC countries may have to re-think cuts they made, either cutting deeper or starting another oil price war to finally knock down the competition.
      Last week, numbers for rigs getting back to work increased again, this time by five, while US domestic oil production hit 9 million barrels, an added 600,000 barrels of crude a day since the first week of October.
      Rigs increased by 145 additional units in the field since that same October.

Gasoline finally shows a draw
      US inventories of gasoline showed a modest drop in inventories last week with refiner capacity hitting a record low for the year of 84.4% of total US production.
      While refineries may be down for summer maintenance to refine more gasoline at the end of winter, it remains to be seen where gasoline prices could head when capacity picks up. Even though demand has remained below seasonal levels as compared to other years, if capacity picks up in the next couple of weeks before present inventories are drawn down, then we have the set-up for lower prices at the pumps.
      No demand means lower prices in the hope that consumption picks up.
      It's a ticklish situation refiners and Big Oil finds itself in.

That's it for this week!

Regards,
George Murphy
Twitter @GeorgeMurphyOil

Tuesday, February 21, 2017

Price changes for Thursday, February 23, 2017


Hi to all,



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



*Heating and stove oils show a drop of 2/10ths of a cent a litre.

*Diesel fuel shows a drop of 4/10ths of a cent, and...

*Gasoline shows a drop of 1.8 cents a litre.



Market highlights



Forget a collapse in oil. How about a collapse in gasoline?

   It may sound funny immediately before the spring run-up in gasoline prices that happens starting this time of the year, but data from the US Energy Information Administration seems to be pointing the way towards an extended drop in gasoline-that is, if demand doesn’t pick up soon.



   Data from the EIA indicates that US gasoline inventories are at their highest since the EIA first started recording gasoline inventory data back in 1990.



    Secondly, while gasoline production hangs around 9.5 to 10 million barrels a day, and with refinery capacity down to 85% due to refinery maintenance, even a drop in capacity to 9.3 million barrels a day still shows a build in inventories. Demand for January hung around 8.2 million barrels a day, itself a strange anomaly in a usually busy US economy, blowing up inventories in the US northeast to record levels.



     So, with those factors, with refineries shortly coming back into production, if demand doesn’t pick up in the interim to swallow up bulging inventories, then prices can’t be expected to climb appreciably heading into late spring and early summer.



     Inventory data is going to be the focus the next few weeks.



US rig count climbs again

     While US domestic production remained steady last week hovering close to 8.977 million barrels a day, the US rig count climbed again last week as more small producers got back into the markets. The rig count showed that another ten rigs went back to work last week with oil holding steady and OPEC compliance registering close to 90%.



     That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil





Tuesday, February 14, 2017

Price changes for Thursday, February 16, 2017

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that heating oil as well as Diesel numbers may be off slightly due to winter blending.

*Heating and stove oils show a drop of 3/10ths of a cent a litre.
*Diesel shows an increase of 2/10ths of a cent a litre, and...
*Gasoline shows an increase of 1.6 cents a litre.

Market highlights

API reports another huge inventory build
     While some may have been expecting a drop in gasoline and oil prices this week, it was left to the imagination as to why prices didn’t fall with a huge inventory build last week.
     However, the American Petroleum Institute is again reporting a huge build in inventories ahead of the US Energy Information Administration’s report due tomorrow at noon, this time by 9.98 million barrels.
      Last week, in digging down through the evidence, it was found that while there was indeed an inventory build, it was mainly caused by the movement of oil in storage in the Houston shipping channel with that oil coming ashore, as well as a build in imports in the US northeast that caused the issues.
      Sad to say, I fear the markets are running out of excuses for the inevitable fall in oil that will occur with such inventories building as they are. Oil right now is on borrowed time, artificially held up with market excuses like “ a perceived” increase in demand.
      Demand may seem to be up when we see a draw-down in inventories of gasoline, but it’s a hard fact to stick by when you see capacity dropping at such a rate that itself affects inventories. Gasoline inventories from the industry-led group are also up. What will be the excuse next week?
      It’s kind of like buying a used car and not having the down payment. You don’t’ have to have a cent in your pockets, but the papers can be worked so you have it on paper to make the purchase. You still know you’re going to have to pay for it in the end.
      The oil markets may have to get ready for the shock.

US rig count up yet again
     While US domestic production creeps closer to nine million barrels a day, the US rig count is up yet again this week according to Baker-Hughes, this time up by another 12 rigs.
     US domestic oil production should hit the “magical”9 million barrel a day mark either later this week, or next week, that should have OPEC taking a keener eye as they lose a little more market share from US exports.

That’s it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Wednesday, February 08, 2017

Price changes for Thursday, February 9, 2017


Hi to all,



Here’s what I have for this week’s price changes. Keep in mind that winter blending may throw off the Heating/stove and Diesel numbers from the actual that may occur:



*Heating and stove oils show an increase of 9/10ths of a cent a litre.

*Diesel shows an increase of 1.1 cents a litre, and...

*Gasoline shows a drop of 7/10ths of a cent a litre.



Market highlights



US shale having an impact

    Recent inventory reports seem to confirm what was predicted months ago, that the US shale and tight oil industries would be quick to respond to any cuts implemented by OPEC and some non-OPEC producing countries. With growing inventories, particularly the last three weeks, oil prices have seen more downwards pressure as inventories have continued to grow.

    Pressure is also coming off gasoline as demand has tailed off, leaving gasoline inventories with growth twice as much as what was expected.

    US rig counts also continue to climb as investors of small-time producers have entered back into the markets to fill the gap left by the November cuts.



API report shows a massive build in inventories

     The American Petroleum Institute, an industry related group released their weekly inventory report which should be quite alarming, if you’re an OPEC member.

     The group’s report showed a massive crude inventory increase of 14 million barrels this evening which should impact prices in electronic trading before the market open.

     Gasoline inventories also showed an increase of 2.9 million barrels, well more than double market expectations, that should impact spot prices for gasoline over the next week.

     A clearer picture of what is happening out there will be drawn from the US Energy Information Administration’s own inventory report which will be released around 12 noon NST.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil