Price changes for Thursday, August 23rd, 2018

Hi to all,

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

*Heating and stove oil to drop by 9/10ths of a cent a litre.

*Diesel fuel to drop by 1.1 cents a litre, and...

*Gasoline to drop by 1.3 cents a litre.

Market highlights

U.S draws from strategic reserve

While oil markets this week were fixed on Iran sanctions and a possible shortfall, the U.S answered back to that possibility by dipping into it’s strategic reserve, allowing an added 11 million barrels to flow into the markets to address any shortfalls that may arise should Iran sanctions take hold.

     The move is to ensure consumers don’t get hurt as a result of any shortage in supply come this fall.

     The U.S strategic reserve contains almost 6660 million barrels of crude to use in the event of any national emergency.

Sanctions start to kick in. But will they be effective?

Iran is starting to feel the pinch of sanctions that will come into full force starting this November, with nations from the European Union, Japan and India already cutting imports from the Middle East country.

      But questions swirl from China, who only recently, placed U.S imports into China under a 25 percent tariff.  With China being one of Iran’s largest buyers, the switch is already being made by China to have Iranian crude brought in.

      While Iran has it’s treasury under threat as a result, Iran itself an OPEC member, is coming out against the oil organization, expressing concern that other OPEC members will step in and take market share from Iran to its customers in the E.U and other nations it exports to.

       The question then may very well be how long Iran will tolerate other OPEC members hijacking its market share and what would they do to prepare for such an eventuality. Could Iran leave OPEC as a result?

API reports a draw on crude supply

The American Petroleum Institute has reported a larger than expected draw on its measure of crude inventory, but the inventory report everyone is waiting on will come from the U.S Energy Information Administration’s inventory numbers noon Wednesday.

      The API data reports a draw of 5.1 million barrels, along with a reported 990,000 barrel draw on gasoline inventories.

      No word on refiner capacity numbers, however.

That’s it for this week!

Regards to all,

George Murphy

Twitter @GeorgeMurphyOil