Price changes for Thursday, February 25, 2016

Hello everyone,

Here's what I have for this week, all in all, not too much off what I had last night.

Keep in mind the winter blend, which may throw off the numbers for heating and diesel fuel slightly...

*Heating oil shows a drop of 9/10ths of a cent a litre.

*Stove oil shows the same drop of 9/10ths of a cent.

*Diesel shows a drop of 1/10th of a cent a litre, and...

*Gasoline shows a drop of 1.5 cents a litre.

*Highlights

*The Canadian dollar gained a little more ground against its US counterpart, averaging another penny up over the last week against the greenback.

*A good build in gasoline inventories last Wednesday from the US Energy Information Administration is starting to show consumers some good signs on where potential pricing may be positioned come the summer driving season. With inventories still maintaining their builds, consumers may see the same prices that they are seeing now. Demand for gasoline remains weak and refinery capacity is also low as refiners head into their switchover from distillate production to gasoline. When capacity picks up, and that is expected over the next couple of weeks, it could add extra gasoline inventory to already positive numbers. Prices could potentially fall further!

*OPEC, Saudi Arabia can't seem to get it right...

In what must have been an almost embarrassing speech by the Saudi Arabian oil minister Ali Al Naimi, he professed today at a Houston oil conference that they had no intention of trying to knock out US shale production. But he also added that this may be a good cause for more expensive projects to shut down, or for investors to pull out of those same projects.

     Secondly, and probably more importantly, he also recognised the new reality that oil prices may never rebound to their previous highs of just two years ago when oil prices exceeded $100 US. They're not happy with oil where it is to now, but they may have no choice but to live with it. That's a signal to me that they're into the fight for their market-share for a long time.

I'll leave it at that for now!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

US Energy Information Administration report: Starting to get a "read" on summer

The latest report from the US Energy Information Administration released today gives a good indication where prices could be headed for consumers this summer.

According to the report, crude stocks have climbed again to reach a rough 504 million barrels on inventory on-hand, a record since record keeping began in 1981. Another 2.1 million barrels of crude oil was added to last week's numbers.

Gasoline inventories were also reported up this week by another 3 million barrels, and along with an increase in refiner capacity, figures show that in spite of the low price, consumers still seem to be holding back.
(See the summary here: http://ir.eia.gov/wpsr/wpsrsummary.pdf )

Why?

Well, maybe it's a sign that consumers are simply not paying as much attention to the pump price now that they're at a level that is more affordable. They simply don't have to go on a buying spree when they see prices reflected at a level that is affordable.

And maybe they are more aware and simply are practising conservation, which is great!

Perhaps the oil industry should take note the next time (if ever) that prices start to increase with rising oil.

What the report tells me simply is this: While gasoline and crude oil stocks are continuing to build, it is the middle of February. Traditionally, you would see gasoline speculators pouring into the markets well ahead of the summer driving season to try and take advantage of the opportunity to invest in anticipation of an increase in demand.

That hasn't started to happen. I'm wondering if it ever is going to...

Here's my read then for the summer, if this "trend" keeps up.

Simply put, "what you see is what you get"...At least so far...

With no sign of an increase in demand yet, consumers looking to plan their summer might be able to do something they haven't done in a few years: Go further!

Regards,

George

Price changes for Thursday, February 18, 2016

Hi to all,

Here's what I have for this week's price changes, keeping in mind "winter blending" which may throw off the numbers for heating oil and diesel fuel just a little.

*Heating oil shows a drop of just 8/10ths of a cent a litre....
Stove oil shows the same 8/10ths of a cent drop.
*Diesel fuel shows a drop of 4/10ths of a cent a litre, and...
*Gasoline shows a slight increase of just 3/10ths of a cent a litre.

Keep in mind that my margin for error is three tenths of a cent a litre outside of winter blending!

Highlights.

*The Canadian dollar remained relatively steady against the US greenback, averaging a rough $1.385 against the US buck over the last seven days.

*Markets are mostly in a waiting mode as they wait to see if any concerted action will be taken to institute production cuts between Russia, Venezuela and Saudi Arabia. Saudi Arabia and Russia are mostly responsible for added oil supplies worldwide.
   As a footnote to all this: The Saudi's, Russia, Venezuela and Qatar, all signatories to a deal that will stabilise production at January levels, say that Iraq and Iran must also curtail production if the agreement is to hold.

   Fat chance of that!

   Remarkable when you think about it, but world oil producers' concerns over added world crude stocks that is keeping crude oil prices at an extreme low are now talked about between major producers in the world's biggest case of "collusion" in an effort to help bolster prices again.
So much for the free market!

*Watch Brent prices in the coming few weeks.
News out of Iran sees that country sending it's first load of oil in four years to the European markets this week as Total SA out of France is seen to be buying off the now sanction-free country.
Iran, by the way, is not party to ongoing talks between Russia, Venezuela and Saudi Arabia over production cuts.

*A new brokered peace in Libya may also add more crude to the markets. With a peace deal in place with a new provisional government, it is possible that European markets will see added shipments from the North Africa country in the coming weeks as they seek to re-enter the market after an uneasy civil war.

That's it for this posting!

Regards,

George
Twitter @GeorgeMurphyOil

Price changes for Thursday, February 11, 2016

Good evening everyone,

Here's what I have for this week's price changes, keeping in mind winter blending that may throw off the heating oil and diesel numbers a little.

*Heating oil shows a drop of 1.3 cents a litre....
*Stove oils show down by 1.3 also.
*Diesel shows a half penny drop, and...
*Gasoline shows a huge drop of 4.7 cents a litre.

Highlights


*As predicted a few weeks ago, it certainly appears that a price war of sorts will start up against oil prices with most OPEC nations raising production in January month by an added 280 thousand barrels a month. Current production was a total of 32.6 million barrels a day. That hit Brent prices particularly hard today as most of this production would most likely be sent to the European markets. Keep reading...

*Still no real sign of a drop in US domestic production after a slight drop over the last six months. US domestic production in January remains at a  stalwart 9.2 million barrels a day. Pretty important signal to Saudi Arabia that they're going to have to drive prices lower, if they hope to knock out US domestic production as an important player in world oil prices. That, and compete directly with US customers for crude oil.

*The International Energy Agency is warning that low prices may continue for some time yet as all countries currently are producing 1.75 million barrels a day more than what the world actually needs. That's up another 250,000 barrels a day from their previous needs of world demand.

*Add to the mix, Kuwait as another country and OPEC member setting themselves up to produce more crude oil in the final quarter of 2016. They're set to increase production from 2.5 million barrels a day to 3.15 million by the end of the year.
Talk about exacerbating the problem!

*Finally, I'm surprised to hear that Nalcor will be looking for an increase to allowable expenses for added burning of oil in Holyrood! All things considered, prices for #6 oil that they use is now well below what they adjusted for months ago when we received a drop in electricity rates. Hopefully, the consumer advocate will defend this "ask" on the part of Nalcor and champion a drop in electrical rates as a result of the drop in price of the oil they use!

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Of market plays, reality and other oily bits...

Surprise!

You must be wondering exactly what goes through an oil speculator's head whenever we see what we've witnessed today in the oil markets. In spite of the breaking news the last couple of hours today, speculators still can't grasp the simple facts that lay before them that keeps them hedging their bets into a radically changed market.

It's simply not the same place since OPEC first played their lot in 1997. That was the year they wrenched production downwards in their effort to increase the price on a barrel. Succeed they did, but only to have others to explore with different tools into long-known shale resources that they thought would never be tapped.

How wrong they were when the advent of slickwater did them in starting in 2008! The markets simply haven't been the same since.

But today's market news simply tells the state of the speculator, playing with God only knows who's money, but playing with it nonetheless.

If you're Stateside, you're 401K is taking a beating.

So, here traders were, from last Friday, dealing with "news" that Russia and Saudi Arabia were into some sort of talks on a concerted market action to raise prices, because you know, every time your country goes to war, you have to have a way of paying for it. So, you don't say "no" to the course of action.

Oil rises as a result of said "talks on a production cut". Both countries neither confirm, nor deny...

Iran enters and puts the kibosh on those talks late Friday and the electronic sell-off into Monday and Tuesday squares away the reality again. All is in balance...

Then today...

In spite of the latest US Energy Information Administration's report, and the promise held within of the market reality of declining storage, excess supply and slack demand for refined products and a world awash in crude oil, prices increase markedly...

Why?...

That "nasty" rumour of OPEC master Saudi Arabia and Russia talking again.

No confirmation.

No denial.

Oil rises...

But it's your investments! You expect a "return" because that's for retirement and returns are supposed to happen, right?...

Deal with reality. EIA results showing 503 million barrels in storage, a record high not seen in eighty years!

Gasoline inventories up another 5.9 million barrels, well ahead of the summer driving season when the speculators start to turn their attention to a peak in gasoline demand, all in spite of refinery capacity down to a low of 86.6 per cent!

Consumers simply aren't burning the stuff, and depending what side of the ecological fence you're on, that's either a good or bad thing. Yes, Mr. Speculator, you're really starting to run out of places to put the oily bits down on. Seems with oil, it's both out of luck and out of time.

Take some worthy advice.

"Put your bucks into alternative energies and let it ride..."

*******************

George

Twitter @GeorgeMurphyOIl

Price changes for Thursday, February 4, 2016

Good evening!

Here’s what I have for this week’s price changes. Please keep in mind that the numbers for Heating oil and Diesel fuel are subject to winter blending and may be off somewhat. Use them as a rough indicator of direction!

*Heating oil shows an added 3.6 cents a litre.

*Stove oil shows the same 3.6 cents a litre.

*Diesel shows an added 3.4 cents a litre, and...

*Gasoline shows an added 6/10ths of a cent a litre.

Market highlights

Canadian dollar steady

*While oil gained some strength over the session, rising to touch close to $36 US for Brent, the Canadian dollar rose right along with it. Averaging close to $145 last week, the dollar gained almost five cents against the US dollar, but did not retreat with the last couple of days trading, staying at a steady $1.40 against the greenback.

US inventories

*While US inventories of crude oil, gasoline both increased last week, prices for distillates like heating, stove oils and Diesel fuel all decreased with colder weather in the US northeast and Mid-west. Inventories were nailed with a loss of 4.1 million barrels, showing good demand for the products, and that’s where speculators poured it on. Crude oil added an additional 8.4 million barrels while gasoline was up another 3.5 million.

            Refiner capacity dropped to 87.4% from the 90.6% recorded the week previously due to unscheduled refinery outages.

Marine Atlantic surcharges

*Any increase to surcharges to Marine Atlantic customers should be totally unacceptable for anyone in this province. While not directly fuel related, any future increases to fuel surcharges are coming, according to the federal corporation. Representation from this province should be made to prevent any increases that supported the former government’s policy of making the crown corporation a “self-sustaining” entity. The policy of any government should be to connect a country, not bar anyone from entry or exiting from that province. “Any increase in rates adds to an artificial inflationary cost that is passed to consumers” and should be absorbed by the federal government.

            Secondly: The boats we have now were first purchased as a replacement to the old “Caribou” and “Joseph and Clara Smallwood” boats, not only because of twenty year replacement, but because of their fuel efficiency. While there hasn’t been any marginal decrease in marine diesel prices, it is wrong to assume that consumers and users of the ferry system will have to pay higher costs due to higher prices for the fuel in the future. Already, there is a glut in shipping worldwide, so much so that fuels, like marine diesel fuels, are expected to retreat in the face of less consumables being transported.

           Lastly: If there’s any improvement in the Canadian dollar, then consumers should be, not only expecting, but demanding a break to fuel surcharges because of the same lower cost of fuel acquisition. The price of fuel, right now, between 2014 and 2016, when we were close to par and today’s dollar, both show that we essentially are paying the same price for fuel.

            Either way, absorb the cost. It’s the price of doing the country’s business!

Watching: US inventories, gasoline inventories, Iran production, Saudi-Russia arrangements, OPEC production figures.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOIl