Tuesday, December 04, 2018

Price changes for Thursday, December 6th, 2018


Hi to all,



Here’s what I have for this week’s price changes. Keep in mind that the distillate fuels are subject to winter blending, so they may be off slightly.



*Heating and stove oils to drop by 2.4 cents a litre.

*Diesel fuel to drop by 2.5 cents a litre, and...

*Gasoline to drop by 8/10ths of a cent a litre.



These numbers will be adjusted again via social media Wednesday morning when the last data-point becomes available.



Market highlights



Alberta and OPEC both to cut production

In what some may think to be an unusual move, Alberta will do as OPEC countries have long been doing to support prices from time to time. For the first time I can think of, Alberta will cut back oil production by 325,000 barrels a day in order to try and support prices for their land-locked oil resources.

     By limiting production by 8.5 percent, the Notley government is hoping that the price for Alberta crude oils will rise, thus increasing their revenue take and helping to keep Alberta fields working.

     Meanwhile, in the Middle East, and after the G20 meetings in Argentina, both Saudi Arabia, other OPEC members and Russia are talking about an initial production cut of 1.3 million barrels a day. But latest talk out of the Middle East is signaling that cut may be reduced to a million barrels a day as Alberta has taken over 325,000 thus making OPEC think twice about cuts that were to be brought in.

      We’ll find out later this week exactly how much OPEC will cut production by later this week when OPEC meets again in Vienna.

    

US-China trade war ceasefire

The US and China have signaled their intent to call a 90 day ceasefire in their trade war in an attempt to reach an agreement on the imposition of tariffs on goods manufactured in China.

      The Chinese were countering the tariff call by the US with a call for a twenty five percent tariff on imports of U.S crude. While oil increased in price just a little, it has since flattened out on doubts an agreement could be reached.

      Concerns over oil prices arose with the possibility of Chinese economic troubles had tariffs been placed on Chinese goods and oil fell appreciably as a result. Mind you, Trump has said that placing major tariffs on China remained a possibility if the US doesn’t achieve what it believes to be a fair deal on trade and



Global economic slowdown on the way?

Concerns over a global economic slowdown continues to weigh against oil again today as some companies continue to report lower than expected earnings.

      The issues of lower earnings seem to rise every few days in the markets and that weighs against oil as demand is seen to possibly slip with any worldwide slowdown.



Crude averages for this year so far

Merrill Lynch is reporting that the average price for Brent so far this year is $72.80 a barrel, while West Texas Intermediate coming in at $66.10 a barrel US.

      Brent has averaged $72.86 a barrel between April 1st and the end of October according to my numbers.

      Pretty close!

      The province has said it thinks Brent will average $74 US a barrel for this fiscal year.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

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