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Tuesday, May 29, 2018

Price changes for Thursday, May 31st, 2018


Hi to all,



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



*Heating and stove oils to drop by 1.1 cents a litre.

*Diesel fuel to decrease by 1.3 cents a litre, and...

*Gasoline to decrease by 1.6 cents a litre.



Market highlights



As predicted...Prices start a retreat

A few weeks ago, I presented a scenario that I have seen in other sessions where gasoline and oil prices rose ahead of the U.S Memorial Day weekend.

      I am also on record as saying that the Memorial day weekend was often the peak that I have seen outside of the months of August and September where “Hurricane Season” reigns and has upwards influences on prices.

      Well, we’re here, but not to the degree as in other years, mainly as a result of the Canadian dollar losing further ground against the U.S greenback. So far this past week, since the end of the last pricing session, the “Canuck Buck” has lost close on 2.5 cents against the U.S dollar.

       With the Canadian dollar being an important factor in working up my numbers, it has become evident that we’re going to see further slippage in the dollar, which means a slower return to lower prices, also what I knew was going to happen.

        What we should all not tolerate is Canadian consumers being left to susceptibility of a lower dollar that will start to cost us more for the goods coming back to us as consumers. While fuel prices may be in a slow recovery in prices to the consumers benefit, we may be paying the price in higher costs for consumer goods before transport costs are even figured in to the equation...

        Right now, the disparity between the Canadian dollar and the U.S dollar at par is costing consumers a rough 35 cents a litre at the pumps...

        Here’s hoping that in the coming days refined product prices take a steeper hit...



Russia and OPEC reinstate production levels

       It was eighteen months ago almost that both OPEC and non-OPEC nations met and agreed to oil production cuts that would help “re-balance” the market by absorbing the world glut of oil.

       If you believe what is coming from the groups involved, then we may be very close to seeing an added 1.8 million barrels a day of capacity added to the oil markets once again, a move in the markets that helped to spark a retreat in oil prices and refined commodities.

      In November of 2016, both OPEC and non-OPEC producers agreed to cut back on production starting in early 2017 to help support oil prices, a deal that was renewed later in February 2018.

      OPEC will next meet on June 22nd, but it seems a moot point now as word has gotten out to other OPEC members to pick up on production again, a trend that may very well be picked up on as OPEC production data for May month comes out next week.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, May 22, 2018

Price changes for Thursday, May 24th, 2018


Hi to all,



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



*Heating and stove oil to increase by 1.4 cents a litre.

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

*Gasoline shows a 2.1 cent a litre increase at the pumps.



Market highlights



Watching the inventory wheel go around...

We may be about to hit “peak pricing” this season...

     The last time gasoline prices spiked as severely as they did, a measure I like to call “enforced conservation’” stepped in to help bring prices down. Numbers I have seen a long time ago seem to add to the fact that because of higher prices, consumers are forced to buy only what they can afford rather that what they really need. In other words, they’ll “reign back” their purchases of fuel with that same $20. They don’t increase their spending a great deal, and, if they do, it’s out of necessity that they do it.

     Impacts on inventories are first seen south of the border where everything is relatively close travel-wise. And when consumers are buying less product for the same amount of money, it tends to reflect on U.S inventories sooner rather than later.

     American Petroleum Institute data from this evening has shown an increase in gasoline inventories by just shy of a million barrels, but the real data to watch will be from the U.S EIA noon Newfoundland and Labrador time.

     I’m keeping an eye to the U.S as we approach the start of the U.S summer driving season this weekend as prices have now started hitting $3 US a gallon in  most areas.                            Tomorrow’s inventory report may be the first signal that U.S consumers are getting close to their breaking point and have already started to conserve as prices rise.



Iran tensions

Iran has turned down new U.S conditions needed to be met for Iran to avoid a new series of sanctions.

     In a speech on Monday, secretary of State Mike Pompeo set out some pretty harsh conditions that include Iran not using its influence in other areas of the Middle East. To tell the truth, it would have been a surprise had Iran agreed to some of those conditions set out in a twelve point message of “asks” from the U.S in order to avoid sanctions.

    Iran is also asking European Union members who support the present Iran nuclear deal to purchase more oil from them in the event that oil sanctions hit Iran. The move may hep it avoid any drop in production where product was shipped to the U.S.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, May 15, 2018

Price changes for Thursday, May 17, 2018


Hi to all,



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



*Heating and stove oil to increase by 2.4 cents a litre.

*Diesel fuel also to increase by 2.4 cents a litre, and...

*Gasoline  to increase by 2.7 cents a litre.



Market highlights



*Middle East tensions continued to weigh on the markets this past week as Israel and Iran stepped up their tit-for-tat with Israel launching attacks against Iranian positions in Syria.



*Support for higher oil prices also comes from collapsing production in Venezuela as production from the South American OPEC member has fallen from 2.1 million barrels a day in January 2017 to April 2018’s production of 1.43 million barrels a day. While demand has risen hand in hand with OPEC production cuts, production from Venezuela has fallen well below their own production from years back, helping to erase part of the world glut of oil.



*OPEC compliance continues to be near a hundred percent as total OPEC production cuts have steadily fallen since the implementation of cuts in November 2016 to support oil and erase the glut of oil on the markets. Oil demand for the last three months has actually been averaging around 31.93 million barrels a day. Only Nigeria has reported an increase in production so far this month.

     What is remarkable this time around is the fact that all members have not cheated on quotas as they have in other times of cuts which makes rising oil prices more amazing to watch.



Watching:

     *Watching the U.S rig count. Last week showed the U.S rig count increase by ten rigs as a sign of some drillers entering the markets.

     *U.S domestic production increased by 91,000 barrels this past week as producers entered the fields and added to production that has averaged 35,000 barrels a week increase the last few years. There will be new inventory data released next week which may show further strong growth in domestic production.

     *U.S inventory data showed a drop in crude and gasoline inventories with both showing drops of 2.2 million barrels. New inventory data comes out Wednesday at noon Newfoundland time.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, May 08, 2018

Price changes for Thursday, May 10th, 2018


Hi to all,



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



*Heating and stove oil to increase by 7/10ths of a cent a litre.

*Diesel fuel to increase by 3/10ths of a cent a litre, and...

*Gasoline shows a drop of 3/10ths of a cent a litre.



Market highlights



Trump pulls his own plug

Donald Trump made it reality today as market traders had suspected; that Trump would withdraw from the Iran nuclear deal, putting a stamp of formality on what others had already priced into the markets.

     It’s no surprise that he could pull the U.S plug on the deal when you look close. Maybe a settled hardened peace out of the agreement was done because the U.S needed Iranian oil back then, but it certainly doesn’t now.

     Growing U.S domestic production has grown a lot since the deal was first signed, so the loss of any Iranian imports of oil into the U.S wasn’t going to be a huge loss anyway. U.S imports just today have been reported to have dropped from 1.7 million barrels a day to today’s 1.5 million barrels a day.

     U.S domestic production has surpassed 10.6 million barrels a day, so it may be seen as an insignificant loss to the U.S markets.     But while speculators played the Iran card over the last few months, it did succeed in raising oil prices, and if sanctions on Iran’s oil are a target, it may be less lucrative than hitting it’s finances instead of oil exports. Consumers may see a slight rise in oil, but any sanctions on oil exports will take some time to take hold.

     The problem for the U.S administration now remains that it has isolated itself in a situation where it has to prove the sanctions are again needed with world agreement.

     Trump is just not getting it.

     Other signatories to the agreement like China, Germany, France and others of the European Union simply will not stop the agreement, and the United Nations has also come out now backing the initial arrangement in the Iran nuclear deal.

      Donald has himself, and his nation, painted into a corner.



U.S inventories are up

U.S crude oil inventories increased last week with a huge build of 6.2 million barrels that helped steady oil prices in the markets this week.

     Gasoline inventories also increased, rising by 1.2 million barrels over the last week. That also showed some effect, helping gas prices to retreat slightly in the last week.

     Distillate prices show an increase this week, supported by the news that inventories of that fuel group dropped by 3.9 million barrels.

     Refiner capacity was reported at 91.1 per cent.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Tuesday, May 01, 2018

Price changes for Thursday, May 3rd, 2018


Hi to all,



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



*Heating/stove oils to increase by 8/10ths of a cent a litre.

*Diesel fuel to increase by 1.7 cents a litre, and...

*Gasoline shows an increase of an even penny.



Market Highlights



Peak pricing-for now?...

    * Consumers in Newfoundland and Labrador, and New Brunswick can expect to see a slight increase at the pumps this week as prices look to be peaking after rising on  increased Middle East tension and a falling Canadian dollar.

     * Markets are still playing on fears that there will be a further outbreak of violence in the Middle East that may lead to some supply disruption, but a possible break in the Iran nuclear deal by the U.S after the May 12th deadline to get a new deal in place on Iran nuclear programming had some speculators running for the shade of the strong U.S greenback rather than oil.


      *Accordingly, it seems that any fears of a U.S pull-out from the Iran nuclear deal has stoked some fears of sanctions being placed on Iran, but it is unknown at the time if sanctions would mean an imposition of a crude oil export cut. If that happens, oil could rise again.


      * The Canadian dollar has lost another 1.5 cents on average against the U.S dollar this last session with the Canuck Buck hitting $1.2867 against it’s stronger neighbour.


      *U.S crude inventories signaled a gain last week of 2.2 million barrels while gasoline inventories increased by 800,000 barrels on 90.8 per cent capacity.


      *U.S domestic production increased by 46,000 barrels a day as domestic production again showed an increase10.586 million barrels a day. The growth is seen as a little weak considering the price of oil and still shows me a “reluctance” for anyone to jump into the domestic production scene.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil