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Tuesday, July 28, 2015

Price changes for Thursday, July 30, 2015

Good evening all,

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

Heating and stove oils predicted to drop by 1.25 cents a litre.
Diesel to drop by 8/10ths of a cent, and...
Gasoline to drop by 3.2 cents a litre.

Market noise
Bank of America on oil
Bank of America is projecting more weakness for oil to come in the third quarter of this year. Expectations of the company show Brent prices to average $50 US from their previous estimate of $54 US  a barrel. Prices for WTI (West Texas Intermediate) were expected to average $45 US a barrel from their previous estimate of $50 US.

US domestic production seen rising
US drillers added an unexpected 21 drill-rigs to the markets this week. The move was a surprise, but shouldn't have been with investors looking for a return on their investment as well as expectations from cost cutting measures. Those measures included everything from salaries to "re-fracking" previously producing wells to get new production. The move removes previous drilling costs with the assumption being that the well is already done, so the frack can occur. Canada added eight rigs over the same time frame last week.

Brent prices to falter amidst market turmoil?
Oil prices pushed lower this last regulatory session as market unease in China played heavily through the week and continues to do so. As stated last week, there were considerable debate from market speculators about the longevity and stability of the markets in China. While growth has massively slowed, stocks there continue downwards, increasing doubts of overall Chinese oil demand. As well, all bets are off now in how much oil Iran can add to the markets, considering the world situation with oil prices. Speculators feel that, with massive world inventories of oil out there, Iran's addition of oil to the pot will only hinder the glut problem on the markets, making it less likely for oil prices to recover anytime soon. Add to that problem a simple fact that, with Iran's entry back into the markets expected soon, competition amongst oil producers will only increase, with that likelihood that everyone is going to be forced to compete for market share.

On this date
Brent oil price on July 29, 2014?...$106.47 US a barrel
Those were the days, my friend!...

That's it for this week!

Regards,

George
Twitter @GeorgeMurphyMHA

Tuesday, July 21, 2015

Price chenges for July 23, 2015

Hi to all,

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

Heating and stove oils to drop by 1.4 cents a litre.
Diesel fuel to drop by an even penny, and...
Gasoline to drop by 2.1 cents a litre.

In the markets
Iran nuclear deal vs production
The nuclear deal with Iran has speculators more than skeptical and divided over how fast the OPEC country can overcome sanctions and get its oil industry moving again. While some speculators said last week that Iran would not be able to produce more than 500,000 barrels immediately for the world market, others are saying they can rebound production in less than four months, rather than the additional 12 months predicted earlier. It's going to be a "wait and see" approach that market speculators are going to have to take. Nothing bites the oil markets like reality!

August buying contract
Now, you'd hardly tell by the weather, but it should be a clue as to what's happening with gasoline prices this week. While gas prices are predicted to be down this week, it's a sure sign that we have to be close to the end of the August buying contracts. That means that the focus will shortly turn towards the distillate group of fuels. It's well known in the markets that, from the time of initial purchase of crude oil to the delivery of refined product, takes a rough forty five days to get to the consumer. Assuming that, we're now looking at speculators starting to turn their eyes later this week to distillate fuels like heating, stove oils and diesel fuel. The focus off gasoline this week with a slight drop in prices may simply be that; while the summer has not gone yet, the opportunity to make a buck in the markets off refined gasoline has come and gone. See what happens with gasoline for the rest of the summer, but futures prices are taking a dip as we get closer to September/October.

Canadian dollar drops
It should be no surprise that with the drop in the Canadian dollar against the US greenback as a result of the drop in interest rates last week, you could have been paying a lot less for gasoline than what I have here for this week. As compared to a month ago, the two cent drop in the Canadian dollar against the US dollar has cost you close to two cents t the pumps. What is showing as a 2.1 cent drop should be four cents this week, but thanks to the "wisdom" of the bank of Canada, its now a little harder for consumers to recover from this "recession". The drop in the dollar just doesn't affect fuel. It also hits consumers for anything, like food, that comes from the US.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Tuesday, July 14, 2015

Price changes for Thursday, July 16, 2015

Hi to all,

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

Considering all the moves in the international political arena, it may not be a lot of action in the refined commodity department, however!

Heating and stove oils show a drop of 1.8 cents a litre on the way.
Diesel fuel shows down by 2.1 cents a litre, and...
Gasoline shows an added 9/10ths of a cent.

Market news

Greece and the Euro

Greece continues to play in the markets, but as much as what people would have figured. With such a low gross domestic product and already an unemployment level that's pretty high, some are saying that Greece has played it's card on oil already. Greece amounts to a much lower GDP than China, which has it's own issues with the stock markets. There, the Chinese government has ordered government run agencies to begin buying stocks of private companies in order to maintain their value and help keep some semblance of order in trading. Some analysts are saying that we can expect to see another thirty percent devaluation of stocks there before stability reached their own markets.

Iran deal
While a deal over Iran's nuclear program has been signed, don't expect to see Iran's oil output to hit an added 1.8 million barrels right away. Analysts say that due to aging infrastructure, Iran can only produce an added 500,000 barrels a day more upon lifting of sanctions, and those sanctions have to be tested before they're lifted. Analysts also say that Iran will be able to add another 500,000 after six months has passed. But the kicker here is that Iran has over 30 million barrels of crude already in floating storage ready to hit the waves as soon as word is given. That's compounded by a total "floating" figure of 174.8 million barrels already waiting to go.

Iraq, Saudi Arabia continue to break production records. Libya back?
Word from Iraq shows that country increasing production again in July to amount to 3.86 million barrels, while it's neighbour, Saudi Arabia hitting production daily at 10.6 million barrels in what I believe is a move by those OPEC countries to stymy the revival of US domestic production. That's another reason why oil showed some retreat over the past week. To add to world glut woes, two of the fighting factions in Libya have reached an agreement to allow oil exports there to resume. Amongst the bloodshed, Libya has been exporting a rough 800,000 barrels a day through two coastal ports previously shut in.

Canadian dollar
The Canadian dollar against the US greenback lost another penny in a week that saw oil prices on the retreat again, albeit to the benefit of the US dollar. Whenever I see a retreat in oil, it's usually a time for speculators to invest in the US dollar, and that lowers our own, considering we have a dollar closely tied to performance of natural resources like oil.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA