Hi to all,
Here's what I have for this week's price changes:
Heating and stove oil to increase by 4/10ths of a cent a litre.
Diesel fuel shows no change, and...
Gasoline shows an increase of 2/10ths of a cent a litre.
* A couple of notes first off. Winter blending is now in effect for heating oil as well as Diesel fuel. From now until later in spring, my numbers for these fuels will be slightly off because of the addition of jet fuel (kerosene) that is added as an anti-freeze agent. That's a fuel that I can't track as of yet. Use these numbers as a "guide" on the direction these fuels may go, and not the definitive.
In the markets
Russia and Saudi Arabia in talks
Interesting to hear that both countries are into discussions around the possibilities of controlling the outflow and production levels of crude oil. Both countries have a direct interest in supporting oil prices, but it could come at a cost if they're successful in limiting crude oil output.
At least, in the short term.
They run the risk of bringing back online all those wells that had been shut in as a result of lower oil prices, and in fact, if they do succeed in increasing oil prices, they may end up losing market share to US domestic producers and those countries who are waiting to also enter into the export markets. Countries like Venezuela and Ecuador are itching for oil prices to come back and they no doubt, will put out more oil to make up for lost revenues.
Still waiting in the wings however, is also the prospect of low China demand and Iran's entrance into the markets later this year in December, or in January, 2016. The entrance of Iran will add an immediate 500,000 barrels into an already over-supplied marketplace.
Oil up on lower US domestic production
The price of oil increased today on speculation that US domestic production has taken a pounding as a result of lower oil prices. Numbers are showing that production has dropped off anywhere from 500,000 barrels a day to as low as 150,000 barrels. That being the case, US domestic production rests somewhere around nine million barrels a day. Keep in mind though, that with any rapid rise in prices, there will be a response by the small oil producer out there. The spigots can be quickly turned back on.
"We're not there yet".
As some oil companies have said in the media, there's a belief that we've reached a turning point where they are saying a recovery is on the way, but they're not so eager to carry on with a return to oil $100 a US barrel. Predictions of a "recovery" include $57 US a barrel in 2016 and slightly more in 2017. What I do think is that they don't consider a rapid response from small US producers in the equation. $57 US is not a "recovery". It's a factor in determining if small producers turn the drill bits into the ground again.
I'll leave it at that for now,