Price changes for Thursday, June 1st, 2017

Hi to all,

Here’s what I have for this Thursday’s price changes. Keep in mind that the gasoline price also includes performance of the product on the markets that compiles the overall number.

*Heating and stove oils show a drop of 1.4 cents a litre.

*Diesel fuel shows a slight drop of 6/10ths of a cent a  litre, and...

*Gasoline shows a drop of 10.4 cents a litre at the pumps.

Market highlights

In spite of summer, the markets are still skittish

While OPEC may have been successful in its mission to extend production cuts to help elevate prices, markets are not all that excited about it, even as the U.S summer driving season has arrived. With not so much as a whimper as a collective sigh, markets are still seeing some holes in the deal the OPEC and non-OPEC members signed a mere five days ago.

     With the agreement was signed, two OPEC nations, recovering from their own internal struggles, were left out of the agreement to reign in their production. That in itself has allowed the possibility of a direct increase in overall OPEC output from present levels. With Libyan production set to climb to 1.5 million barrels a day from 250,000 at present, the difference alone from Libya may be enough to stymy any support for OPEC’s cause of supporting prices.

     Also set this week was a chance for Nigerian production to possibly return from its recent lows, allowing it to not be subject to cuts as well. That leaves the possibility of Nigeria, now exempt from the agreement, to return to close on 2.6 million barrels a day of production.

     Analysts simply can’t see the way out for OPEC as U.S domestic production continues to climb to “pre-collapse” conditions.

     What may help support oil may come as a surprise for some, but it’s a relatively simple guess: While U.S domestic production has been increasing, it has slowed a little, possibly caused by hiring issues in the fields. An industry collapse two years ago that put so many out of work may also be a deterrent for some to return to an industry that is essentially still in a very volatile mood. That may give OPEC oil prices some support in the weeks to come, and I’m watching for that.

Gas taxes drop this Thursday

The Newfoundland and Labrador government, as stated in the last provincial budget, is set to drop gasoline taxes downwards by 8.5 cents a litre (9.8 cents taxes in) Thursday morning when prices will be adjusted by the Public Utilities Board’s Petroleum Pricing office.

      The increase to gasoline taxes saw the government increase road taxes from 16.5 cents a litre to 33 cents per litre in the 2016 budget.

      While I am thankful that the retreat in gas taxes has started, I am also looking forward to getting back to an even playing field between all the Atlantic Canada provinces as soon as next year’s budget.

       At least we’ll enjoy the break at the pumps for the next few weeks.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, May 25, 2017

Here's what I have for Thursday:

*Heating and stove oils to increase by 1.7 cents a litre....
*Diesel fuel to increase by 2.5 cents a litre, and...
*Gasoline to increase by 2.6 cents a litre.

Market highlights

Gasoline continues to rise
Gasoline prices continued to rise this week as the US driving season approaches it's traditional start with the U.S Memorial Day weekend.
      While gasoline demand remains a little weak for this time of the year, speculators are all in with the rising prospects of anticipated demand as the weather starts to warm.
      Gasoline inventories reported last week showed a close balance between rising refinery capacity and a slightly less than expected drawdown on inventories.

OPEC members sign on
With the official OPEC meeting now just two days away, most OPEC members are starting to fall in to an extension of the production cuts agreement signed in November, to another deal ending in March of 2018.
      The agreement has helped oil prices rise in the last week from it's yearly low just two weeks ago.
      Both Brent and WTI prices have risen close on $3 US a barrel over the last week or so helping the rise in gasoline and distillate prices this week.

Trump leaves some wondering
Donald Trump's wish to cut into the US strategic reserve has some wondering, and some in concern for Trump's overall energy policy.
      While Trump wants to reduce the reserve by close on half, it leaves consumers at risk of skyrocketing prices should the US be hit with a string of supply cuts as the world saw with OPEC in the 2000's.
      The release of crude stocks from the US strategic reserve was used as an emergency stop-gap measure to bring some relief to rising oil prices then, as well as a source of oil in 2004-05 when the Gulf of Mexico region was devastated by Hurricanes Rita and Katrina. Oil was sent to centrally based US refineries to keep product flowing to consumers when off-loading and refining of crude was disrupted along the coast at that time.
      With nearly 690 million barrels in reserve in times of emergency, it leaves some to wonder why he would weaken the country's sway on oil prices should another emergency occur.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, May 18, 2017

Hi to all,

Here are the final numbers for this Thursday's price changes:

*Heating and stove oils show an added 2.2 cents a litre....
*Diesel fuel shows an added 2 cents a litre up, and...
*Gasoline shows an added 3.1 cents a litre.

Market Highlights

Gasoline set to increase as driving season approaches

The start of the summer driving season usually begins around the US Memorial Day holiday south of the border. While still a few days away, speculators are hoping to see an increase in gasoline demand this summer, and that's part reason why yours truly is seeing an increase in all spot prices across the board this week.

Saudi’s and Russia extend their cuts agreement

There is also breaking news from yesterday that showed OPEC member Saudi Arabia and non-OPEC producer Russia have signed on to an extension of their cuts agreement signed last November.
That agreement to maintain the same level of cuts extends now into March of 2018.
While it boosted oil prices in recent days, the promise of a powerful pickup in US domestic production (and production in other countries) should be enough to tip the scales back in a few days to dropping oil prices once again.
OPEC has to be careful.
While they may be fighting to bolster prices, they are again kicking open the door for a return of a more resilient US oil industry.

OPEC is set to meet officially May 25^th in Vienna where cuts are on the agenda.

Sorry I didn't publish last week as I was in Cuba. Nice time away and I didn't even check the price at the pumps!

That's it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Good or bad, Oil takes a dive

Well, if you saw oil drop like a stone like I did today, you must have been asking what was on the go?

Oil dropped on news that there's a "potential" settlement between rival factions in Libya. If an unsettled peace does come in, it will probably mean a quick increase in Libyan production and exports.

Why is that important?...

When OPEC and non-OPEC producers signed on to their agreement at the end of November, 2016, Libya, another OPEC member, was not included in the overall production cut. At the time, civil unrest had been raking the country, so, members decided that they would not be included in the cuts Implimented by OPEC. That cut came in around 1.2 million barrels, while non-OPEC producers like Russia, added another 600,000 barrels.

    With Libyan production down to 200,000 barrels at the time, I guess the rest of OPEC didn't think there would be a turn-around in Libyan production like what is expected to happen now.
Libyan production was initially set around 1.5 million barrels a day before the unrest struck, and could all be back online as early as July.

    We may have to wait until May 25th to see the final result of all this, as OPEC is expected to meet then, and they may just decide to deepen the cuts, or forget that option altogether, in which case, we may see oil prices crash again.

    While all a good thing on a consumer perspective, oil's volatility in a situation such as this, does nothing for the provincial coffers.

Regards,

George
Twitter #GeorgeMurphyOil

Price changes for Thursday, May 4, 2017

Hi to all,

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

*Heating and stove oil both show a drop of 1.3 cents a litre.

*Diesel fuel shows a drop of 1.2 cents a litre, and...

*Gasoline shows a drop of 3.3 cents a litre at the pumps.

Market highlights

Can OPEC hold it together?

      Questions surround OPEC in its ability to “keep the group together” in light of recent news and data that shows some OPEC members have not been holding to their end of agreed-upon production cuts the group made in late November.

      While Saudi Arabia has cut back, their neighbours Iran and Iraq have been pumping out extra in the bid to gain market-share and may very well be the reason why in recent weeks, Saudi Arabia has been discounting product prices to both Asian and European buyers.

      If they continue to over-produce, it will itself bring doubts to the oil markets whether the group can maintain, let alone extend a production cut that was meant to support oil prices.

Two weeks of gas inventory gain means a drop in prices

      The last two weeks of gains in overall US gasoline inventories has resulted in a further break for consumers on both sides of the border again this week.

       US inventories of gasoline increased again last week according to the US Energy Information Administration, this time by 3.7 million barrels.

       This is the traditional time of the year that we see extra pressure on gasoline inventories that usually results in increased prices to consumers as the U.S Memorial Day holiday approaches

       The next EIA inventory report gets released Wednesday noon NL time.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil