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Tuesday, November 28, 2017

Price changes for Friday, December 1st, 2017


Hi to all,



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



*Heating/stove oils show an increase of just 3/10ths of a cent a litre.

*Diesel fuel shows no changes, and...

*Gasoline shows a net drop of 4.3 cents a litre. While markets traded up by 7/10ths of a cent this week, government is dropping another portion of the gas tax it added last year. The 4.3 a litre down accounts for that.



Market highlights



Markets steady as they wait for OPEC and Russia movement

Oil prices remained relatively stagnant over the past week as observers keep a close eye on what OPEC will do after this week’s meetings.

     Markets are stepping lightly as OPEC strives to come to a decision on possible further cuts and further participation by Russia and Azerbaijan in an extension to production cuts by non-OPEC producers.

     What is interesting to see, or hear, in all this is how muted that conversation has become about Russia’s further participation in the possibility of extending those cuts past next March 2018. They haven’t come out directly and said they are willing to extend them.

      Russia itself has that possibility of losing some market share to growing U.S domestic production that has hit new heights to the point that the U.S has also started to export into the world market, replacing lost production from OPEC and non-OPEC producers.



U.S domestic production continues growth

U.S domestic production has continued to outpace even Energy Information Administration estimates as a record 9.652 million barrels a day came out of shale areas south of the border over the last week. With oil still supported at $63 US for Brent and $58 US West Texas Intermediate, some small producers are getting back in.

     While growth is at a record, some slowing has occurred as producers are being overly cautious in getting back in until they have their fiscal end of things tightened up.      And while drill-bits are getting back in the ground, some are saying that with a booming U.S economy, other areas of the economy are taking up valuable people resources before the oil industry can get to them. Once bitten by a recent industry collapse, some aren’t so eager as the company themselves to get back in.



     That’s it for this week!



Regards,



George Murphy
Twitter @GeorgeMurphyOil 

Tuesday, November 14, 2017

Price changes for Thursday, November 16, 2017


Hi to all,



Here’s what I have for price changes for Thursday:



*Heating and stove oil to increase by 1.3 cents a litre.

*Diesel fuel to increase by 1.2 cents a litre, and...

*Gasoline to decrease by 1.2 cents a litre.



From the markets



OPEC rethinks demand forecast

OPEC is rethinking it’s forecast for world oil demand and states in it’s release a factor one would have suspected would make a worldwide impact before now: the electric vehicle.

     In it’s demand forecast, OPEC states a lower than expected oil demand because of the electric vehicle and other outside oil producers.

     Today also saw a report from the International Energy Agency that seemed to confirm OPEC’s report that also calls for lower than expected world oil demand.

     The news today sent crude lower from it’s November 6th peak at $64 US a barrel to today’s close around $61 US.



Traders begin to worry over U.S domestic output

Traders are also beginning to worry over the effect of slightly higher oil prices and what that will do to stall the recent rise in oil prices.

     It’s generally seen that with OPEC cuts to production and their initial effect on the price, that there would be some sort of response as U.S small shale producers headed back to the oil patch. Last week’s inventory report from the U.S Energy Information Administration saw a huge build in production with an added 67,000 barrels of oil added on to a record 9.62 million barrel a day output.

     News today also saw a drop in Saudi Arabian imports into North America with the development of “closer” domestic sources.



Futures prices tell a tale

With the province getting some added revenue from higher oil, I saw fit to have a look at what traders are thinking for the future with some of the contracts that are out there.

     For the final quarter of this year, expect $61 US and change as markets rebalance.

     Fiscal 2018 looks the same with oil (Brent) averaging $61 US, but this starts to drop back towards $58 US through to fiscal 2019.



That’s it for me this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, November 07, 2017

Price changes for Thursday, November 9th, 2017


Hi to all,



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



*Heating/stove oil to increase by 1.7 cents a litre.

*Diesel fuel to increase by 7/10ths of a cent per litre, and...

*Gasoline shows an increase of 2.2 cents a litre.



Saudi Arabia rules the oil news

A heir-apparent has taken the focus in the news this week as Mohammed Bin Salman, the next ruler of Saudi Arabia, had his security forces out on Sunday making mass arrests and detentions of any potential rivals to his throne.

     Oil has risen almost $3 US to hit $64 US for Brent crude since news broke of the mass arrests.

      While not seen as an immediate threat to Saudi Arabian governance, it has been seen as clear evidence that there is considerable unrest in the lead OPEC oil producing nation.

      Riding the tails of a revival in crude prices is a projected increase to US shale output in the coming months as U.S producers capitalize on rising oil prices, but they could be running into a problem...



If shale output can’t keep up...



According to a story through CNBC, U.S shale output may be experiencing a  problem caused by the last collapse in oil prices.

     The problem is simple: they can’t get the drill-bits into the ground fast enough.

     Drillers are simply not willing to take so much financial risk without putting their businesses in order to survive a downturn again. The story from Morgan Stanley also says that U.S production won’t be able to step in and fill the drop in production of 1.8 million barrels a day in production that OPEC is thinking about extending past the March 2018 deadline.

         

There could be hope here...

With the rising price of oil and slower prospects in the U.S, is there hope then for pooled resources such as we have here offshore?

     Pooled resources tend to be longer lasting and with less financial risk involved with field longevity.

     If oil is supported in price by slowing U.S shale output, it stands to reason major explorers will step back into long term projects. Outside of other countries trying to develop shale resources, there’s better hope we can deliver from our own offshore.



     Fingers crossed...



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil