Price changes for Thursday, October 18, 2018

Hi to all,

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

*Heating, stove oil and Diesel all show down by two cents a litre.

*Gasoline shows a drop of five cents a litre.

*Keep in mind that winter blending may throw off the distillate numbers somewhat.

Market highlights

Saudi’s and Russians sign on to up production

When I said a couple of weeks ago that there was soft support for oil at $85 US a barrel, the news that the Saudi’s and Russians had entered into an extended production agreement confirmed it.

     With both countries in an “unofficial, secret” agreement to add production that was agreed to in September, traders saw it as a move that would only add to widening speculation of building supply worldwide, and all in spite of dropping production from Venezuela and coming sanctions against Iran.

Saudi threat over Khasoggi incident proves empty

Blogger and journalist Jamal Khasoggi remains on the missing list and Trump is appearing to back away as the Saudi’s also back down from a threat to cut it’s own production.

     Both sides now appear to use any excuse to downplay the fact that a man has gone missing in the interests of diffusing an explosive situation. A cut in production would have raised prices, but it had the potential to cause an increase in internal Saudi unrest and economic damage to the U.S, who seem to have toned down their rhetoric on Khasoggi.

     Market traders continued to send oil downwards in spite of the “threat”.

U.S crude inventories increase

The latest U.S crude inventory report last week showed a build of six million barrels, while gasoline also increased by one million.

     Distillate inventories were down by 2.7 million barrels on 88.8 percent refiner capacity, a sign that U.S refiners were heading into maintenance mode.

     With capacity down, gasoline also started to drop as demand was seen to be lower with the inventory build.

That’s it for this week!

Regards,

George Murphy

Twitter GeorgeMurphyOil

Price changes for Thursday, October 11th, 2018

Hi to all,

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

*Heating and stove oils to increase by 1.8 cents a litre.

*Diesel fuel to increase by 1.9 cents a litre, and...

*Gasoline to increase by 3/10ths of a cent a litre.

**Winter blending is now in effect, so distillate prices may be off slightly from the actual that will occur until springtime!

Market highlights

Irving refinery outage a warning

Consumers were given a scare this week when the Irving refinery in New Brunswick was faced with a shutdown due to an explosion and fire that caused minor injuries, but thankfully, no loss of life.

     The fact that the refinery was already in a partial shutdown mode for routine maintenance also alleviated some fears over any shortage that could have resulted in the markets of Atlantic Canada and the U.S northeast. However, there may be some possible issues if the refinery has to close for any extended period of time in the event of extensive repairs.

      The closure of the refinery that supplies most of the Maritimes and the U.S northeast also serves as a warning on what could happen if reciprocal sales arrangements that lead to the future closure of any more refineries is allowed to occur.

      The same could be said for the need for another refinery to service the region of Atlantic Canada to protect consumers and industry from any further cuts of supply. Certainly if our energy security is to be held at risk of such a possibility.

Sanction day: November 4^th

Sanctions are due to kick in fully against Iran three weeks from now as pressure mounts on other countries to curtail imports of Iranian crude. The policy of sanctions by the U.S on the OPEC oil exporting country seems to be working as CNBC is reporting that exports during the first week of September have dropped again to less than 1.1 million barrels a day.

       Venezuela has also experienced a further drop in production as its economy faces almost total collapse and inflation runs amuck.

        Oil also gained as questions remain around Saudi Arabia’s ability to increase production with the Saudi’s pumping out just shy of 10.7 million barrels a day and Russia also breaking production records.

IEA warns of high oil price damage

The International Energy Agency is also putting out a note and a call to OPEC to immediately increase production before high oil prices start to cause economic damage.

     The IEA calls it a “red zone” where some say happens when U.S prices hit $3 US a gallon for consumers. The IEA is warning that higher oil prices will cause damage to growth in some of the world’s fastest growing economies.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price spike warning: Price changes for Thursday, October 4th, 2018

Hi to all,

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

*Heating and stove oils show an increase of 3.9 cents a litre.

*Diesel adds 4.4 cents a litre, and...

*Gasoline shows an added 3.1 cents a litre.

Market highlights

Can OPEC meet demand?

With oil hitting $85 US a barrel yesterday, some are seeing further strength in oil as Iran sanctions get set to fully kick in the first week of November. While Iran is still producing, numbers are showing that output has dropped further with 1.7 million barrels a day produced from the OPEC member.

     Iran dropped close to 250,000 barrels a day since August.

     Venezuela also dropped production another 50,000 barrels a day with latest figures showing 1.25 million barrels a day.

     With OPEC production now at 32.8 million a day, some questions arose in the markets this week on whether the consortium can produce more if the markets needed it.

      The short answer may be “no”, but some are calling it a “soft ability” to respond to market needs.

       Libya remains volatile, but has maintained a million barrel a day output the last few weeks, while Russia, a non-OPEC producer, has put out almost 11.3 million barrels a day, a post-Soviet record.

        The ability of other non-OPEC producers is coming into play and that may be why some are thinking that it may be a “soft support” for $85 a barrel oil.

         Adding to the soft increase is the fact that, up to now, U.S domestic production has been stalled at 11 million barrels a day. Will we see some further growth now that oil prices have increased markedly?

         Of course, with rising oil comes higher refined product prices, and with oil increasing by almost $6 US since the third week of September, it is reflected in the numbers this week.

NAFTA 2.0 kicks in

Spurred by the signing/ratification of the new USMCA agreement, market forces had their say as speculators saw “business as usual” continuing as agreement was reached.

     Optimism amongst traders also spurred hopes that demand for oil will pick up as any shortfall felt in the economy before the agreement was reached will quickly swallow reserves and help support prices.

      The Canadian dollar has risen close on two cents against its U.S counterpart since the agreement was reached, absorbing some of the hit of rising prices this week.

That’s it for this week,

Regards,

George Murphy

Twitter @GeorgeMurphyOil