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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!


George Murphy
Twitter @GeorgeMurphyMHA

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