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Tuesday, March 10, 2015

Update #2: Final numbers for Thursday price changes

Final numbers for Thursday price changes...

Here's what I have for price changes for this Thursday. After today's drop, it all added up to just a little bit more...

Heating and stove oils to drop by 7.42 cents a litre.
Diesel to drop by 10.1 cents, and...
Gasoline shows a drop of 2.2 cents a litre.

It was great to see a return of distillate prices to something of the norm before the run-up last week. Unfortunately, prices dropped a little later than predicted, but they're still showing in this week's numbers instead.

Prices dropped further today as speculators pulled out of the distillate markets, the reason being that refiner capacity is almost back to normal with just 690,000 barrels a day offline south of the border. it's also the simple fact that things are going to start to warm up now as we get back towards spring. It was time to get out.

Gasoline, not so much, although tomorrow's inventory numbers may reflect the reality that "demand" is simply not there. That may be enough to keep gas prices from starting further down, but I'm keeping a close eye to the usual excuse used as we get closer to the "summer demand" seasonal run-up as we get closer to May month's traditional start to the driving season.

That's it for this week!

George Murphy
Twitter @GeorgeMurphyMHA 


Unknown said...

I read an article from The Toronto Star ( saying that the US is running out of room to store their crude oil and how they are about to hit their max, "If this keeps up, storage tanks could approach their operational limits, known in the industry as “tank tops,” by mid-April and send the price of crude — and probably gasoline, too — plummeting." I'm curious as to why they would be even in this sort of situation in the first place. Shouldn't production stop when the supply starts to greatly outweigh the demand?

George said...

Good question and I'm glad you asked!

A couple of factors playing here. First factor is simple: with US domestic production reaching untold records, producers simply were caught off-guard for storage capacity. They had never faced such an increase in production such as we've seen. To add to that,other producers of oil, such as Canada, Saudi Arabia and Russia, are finding demand for their own products, and thanks to consumers for this, weak, as new product and low demand both compounded the problem.

That's just part of it, but I won't complicate things too much. If you want more, just drop me a line!

Thanks for adding to the discussion!