Hi to all,
Here’s what I have for this
week’s price changes:
*Heating and stove oils show
a drop of 2/10ths of a cent a litre.
*Diesel fuel shows a drop of
4/10ths of a cent, and...
*Gasoline shows a drop of 1.8
cents a litre.
Market highlights
Forget a collapse in oil. How about a collapse in
gasoline?
It may sound funny immediately before the
spring run-up in gasoline prices that happens starting this time of the year,
but data from the US Energy Information Administration seems to be pointing the
way towards an extended drop in gasoline-that is, if demand doesn’t pick up
soon.
Data from the EIA indicates that US gasoline
inventories are at their highest since the EIA first started recording gasoline
inventory data back in 1990.
Secondly, while gasoline production hangs
around 9.5 to 10 million barrels a day, and with refinery capacity down to 85%
due to refinery maintenance, even a drop in capacity to 9.3 million barrels a
day still shows a build in inventories. Demand for January hung around 8.2
million barrels a day, itself a strange anomaly in a usually busy US economy, blowing up inventories in the US northeast to record levels.
So, with those factors, with refineries
shortly coming back into production, if demand doesn’t pick up in the interim
to swallow up bulging inventories, then prices can’t be expected to climb
appreciably heading into late spring and early summer.
Inventory data is going to be the focus the
next few weeks.
US rig count climbs again
While US domestic production remained
steady last week hovering close to 8.977 million barrels a day, the US rig
count climbed again last week as more small producers got back into the
markets. The rig count showed that another ten rigs went back to work last week
with oil holding steady and OPEC compliance registering close to 90%.
That’s it for this week!
Regards,
George Murphy
Twitter @GeorgeMurphyOil
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