Price changes for Thursday, March 31, 2016

Hi to all,

Here's what I have for this week's price changes. Keep in mind winter blending that throws off heating and diesel numbers a little from the actual that may occur!

*Heating and stove oils show a drop of 1.1 cents a litre....
*Diesel fuel shows a drop of 1.3 cents a litre, and...
*Gasoline shows a big increase of 4.9 cents a litre.

Highlights

*While speculators have been making huge pushes in the gasoline markets, we could be on the edge of seeing a second drop in oil prices towards the thirty dollar a barrel range. Considerable evidence suggests that the recent spike in oil prices has been overdone, and that the actualities of a glut of oil out there will again catch up to reality: that oil is over-valued. Countries who have agreed to limit production simply aren't going to be able to make enough of an impact in the markets to bring prices back to sustainable levels.

*In the meantime, gasoline futures have continued to rise the last week along with New York harbour prices. Another draw on US inventories last week of 4.6 million barrels again showed an uptick in demand ahead of the US summer driving season. Any build in inventories in the coming six weeks will probably stop the increases to consumer prices. Refinery capacity numbers have also been a little low ahead of summer due to spring maintenance, and it is anticipated that gasoline inventories will pick up with any increase in refinery production levels.

    The next US inventory report is due again tomorrow, noon Newfoundland time (NST).

*Key OPEC member Iran is not throwing their weight behind any limitations in production. The sanction-free country has announced that it will not even consider any kind of production limits until it has hit four million barrels a day production, from present levels of 3.1 million barrels. The news has to come as a disappointment to neighbouring Saudi Arabia who took over some of Iran's customers when sanctions were first placed on Iran in 2006 with UN resolution 1696. The past, it appears, is coming back to bite the Saudi's.

That's it for this week!

Don't forget to share this note. Any questions, feel free to drop me a note!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, March 24, 2016

Hi to all,

Here's what I have for this week's price changes. Remember the winter blending that may affect heating and diesel fuel prices.

*Heating and stove oils show an added 7/10ths of a cent per litre....
*Diesel fuel shows an added 4/10ths of a cent, and...
*Gasoline shows an added 9/10ths of a cent per litre.

Market highlights

World oil production meeting?
OPEC and non-OPEC producers will meet in Doha, Qatar this coming April 17th to discuss future actions geared towards limiting production levels. It's been a bone of contention between Saudi Arabia, Venezuela and Russia that all producers should take a role in cutting oil production to bring world oil supplies back into balance.
Iran however, has no intentions of discussing the possibility of limiting its own production levels until production reaches four million barrels a day from their present level of 3.1 million barrels a day.

Closely watching gasoline
With futures prices sharply up over the past three weeks, I'm keeping a close eye to spot prices that are being affected as a result. Spot prices are present-day reads, while futures prices are speculators bets thirty to forty five days down the road. Futures prices have been rising ahead of the summer driving season that is usually marked by the US Memorial Day holiday weekend in May. The run-up to the season usually starts in March, and is well on pace by speculators to add some increases at the pump. Right now, futures prices are running around $1.50 a US gallon, while the actual spot for today has hit $1.31 a US gallon. Factors that could affect the spot outcome could be factors like inventory builds/draws, refinery capacity levels, or even demand.

I'll keep you all informed here, if I notice anything substantial on the way!

That's it for this week!

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, March 17, 2016

Hello to all,

All the data is in. Here's what I have for price changes for this Thursday. Keep in mind winter blending!

*Heating and stove oils show a modest increase of 8/10ths of a cent litre....
*Diesel shows an increase of 2.1 cents a litre, and...
*Gasoline still shows an increase of 4.1 cents a litre.

Highlights

*Iran is not set to talk about a possible drop in production with Saudi Arabia, Venezuela and Russia until it has hit full stride in gaining back the same production levels it had hit before sanctions were placed on it. If that's the case, then Iran could be set to increase production by an added one million barrels a day by June. Will the Saudi-Russia maintenance of January production levels hold? It's doubtful.

*With oil now in retreat again, thanks to the news from Iran, the Canadian dollar has also lost some ground against the US greenback, losing about a cent and a half the last couple of days.

*Gasoline demand may be on the up-tick, that's if US inventory data is correct in telling the story. US gasoline inventories fell short of expectations last week with a draw of 4.5 million barrels. Crude inventories again climbed last week, reaching a historic high 519 million barrels. 3.9 million barrels was added, showing that the oil glut continues to weigh on the markets.

That's it for this week!

George
Twitter @GeorgeMurphyOil

Is there a new meaning of "company growth"?

I'm asking you this for a reason...

About a month ago, Venezuela, Russia and Saudi Arabia had a meeting to discuss production cuts that would be undertaken by the countries in an effort to prevent any other crude from adding to the glut of oil worldwide, now estimated to be in the millions of barrels, with about 1.75 million barrels a day added to it.

Some say the excess supply exceeds three billion barrels, a not-very-small amount. It would take the world 33 days to consume it, and for the world not to produce one drop while we're doing it.

But, it was an interesting comment coming from the meeting of the minds that got me thinking the prospects to Big Oil in the future, if they follow the writing on the wall from the new group bent on halting production growth. You see, they also picked up the charge that other producing countries should do likewise and also limit production to help pick up the price.

That's a huge "ask"...

Now, if I was the chair of the board at a major oil company, I would have to be thinking about what the Saudi-Russia alliance were saying. Essentially, they were saying that, because the whole world was awash with black gold, they would have to have a hand in helping them to limit production...

They were going to have to limit the growth of the company that reports to their own share-holder.

Think about that for a minute.

In what must be an almost impossible "ask" of Big Oil, they're being asked to limit production that could affect everything from investment by shareholders, limiting their own exploration programs, refining, storage,  and most especially, take a shot at their profitability and dividends to their shareholders.

Quite a corner to be painted into now, isn't it?

"Cut production, or open the floodgates to lower oil prices".

Boy...I'd love to be a fly on the wall of the BP or Exxon-Mobil boardroom!

All the best,

George

Price changes for Thursday, March 10, 2016

Hi to all,

Remember the winter blend of fuels that may throw off the heating and Diesel fuel numbers somewhat.

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

*Heating and stove oils both show an added 2.7 cents a litre up.
*Diesel fuel shows another 3.1 cents a litre up, and...
*Gasoline shows an added 4/10ths of a cent a litre up.

Highlights

*The drive for $50 US is on as OPEC and other non-OPEC oil producing nations are set to meet sometime around March 20th to discuss further moves to limit production.
OPEC member Saudi Arabia and Russia are both looking for other nations to join them in limiting production levels to "take care" of a world oil surplus that has been driving down prices to historic lows. I'll be keeping an eye to this one!

*The move has started by speculators on gasoline prices for the summer. As April trading markets opened, speculators moved in an attempt to ramp up prices ahead of the summer driving season. Traditionally, that move starts around the April buying contract, but right on cue, prices started out almost thirty cents higher than the close of the March buying contract the month previous.
We'll be watching this one as any inventory building or drop in consumption ahead of May month may help to keep prices low. Right now, because of speculators are pouring money into the gas trading market, it is driving up spot prices to the point that we may see further price increases at the pumps next week.

    I'll also give you the "heads up" when I see these numbers up, so stay tuned!

That's it for now!

Any questions, drop me a note!

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, March 3, 2016

Good evening everyone,

Here's what I have for this week's price changes. Keep in mind the winter blend that may throw off the heating and diesel numbers a little. As well, don't forget my margin for error is three tenths of a cent a litre!

*Heating and stove oils show a 4/10ths of a cent a litre increase....
*Diesel fuel shows an added 3/10ths of a cent, and...
*Gasoline shows an added 1.1 cents a litre increase.

Market Highlights

*The Canadian dollar continues to rise against the US greenback, this week with the Canadian dollar rising almost 2.5 cents against it's competitor from south of the border. It's been rising slightly in par with increasing oil prices. Brent prices have increased this past week from Wednesday's $33.91 a barrel to today's $36.24 US.

*February production numbers show that most OPEC members are sticking by a self-imposed fix in output first proposed by member Saudi Arabia. Numbers show that the Saudi's are sticking pretty close to their January production of 10.2 million barrels a day in February as well. The exception here is with Iran, who produced more than 140,000 barrels a day more in February than in January, hitting 3 million barrels a day since sanctions were lifted.

The weak news on OPEC here is that production remained at a fairly strong 33.06 million barrels a day, down just 79,000 barrels from January figures.

That's enough for this week!

Any comments, feel free to leave them here, or drop me a note!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

From the markets: Worth watching

Speculators have got to be running on empty and on desperation!

Watching the oil markets this past week at least gave one some reasonable hope that, maybe...just maybe...consumers will be given some pause for low prices for gasoline this coming summer. Maybe we may be able to kick-start the economy by getting out and about and spend a few dollars while out on summer vacation...

Enter the start of the April buying contract...

Now, keep in mind that every year starting around March month, we usually see some sort of a move by speculators to put a few dollars on a bet that consumers will burn a little more gasoline during the summer than in any other time of the year...

Keep in mind too, that when they place their bets, it's usually hinged on the start of the US summer driving season, which as we all know in the markets has a traditional start of the US Memorial Day weekend. That usually falls on or about Canada's "May Two four" weekend.

So, with that "buying contract" for April opening officially yesterday, what did I see?...

A run-up in gasoline from about $1.05 US a gallon to yesterday's $1.31 US, an increase of twenty six cents US, or in Newfoundland and Labrador terms, an added 9.3 cents a litre...Plus taxes.

I'm keeping an eye to this to see if it sticks in the markets. At this point, it's just a "bet" that speculators are making that I'm hoping will burn them. Gasoline inventories are well up from last year's levels by almost 30 million barrels, making it a good bet that we may see more builds in gasoline inventories before the US summer driving season starts.

Right now, for the gouge that speculators are putting in the gasoline futures markets, I'm hoping that the latest US inventory data will burn them at their own game!

Fingers crossed on that one!

I'll have numbers for this week's price changes later tonight!

George