Price changes for Thursday, January 31st, 2019

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that winter blending is still in effect and that may throw off the distillate numbers slightly!

*Heating and stove oil to drop by 1.9 cents a litre.

*Diesel fuel to drop by 1.5 cents a litre, and...

*Gasoline to drop by 3.5 cents a litre.

Markets were topsy-turvy this past week as weak economic data was mixed with inventory numbers that sent speculators wondering where it would all end.

     Inventory data this past Thursday suggest that demand for gasoline is off for now, but margins are still good for distillate fuels like heating, stove oil and diesel. With those fuels still in a high demand phase with colder weather in central regions of North America, refiners are still operating at just shy of 93 percent capacity to take advantage of the situation.

     Crude oil is still also gaining inventory, with crude adding eight million barrels and gasoline adding another 4.1 million to an ever expanding inventory ahead of the spring run-up in prices.

     In spite of colder weather, particularly in the central US and Canada, distillate inventories only dropped 600,000 barrels on the week.

     In the meantime, big troubles may be on the way for Venezuela politically, but oil increased today as the U.S placed sanctions on the Venezuelan state-owned oil company Petroleos de Venezuela SA.

     Increasing violence and tensions are mounting, adding the possibility that supply disruptions could result if a shutdown to the oil industry occurs.

     Venezuelan production has dropped to close to 1.1 million barrels a day, and could drop further if violence ensues in the South American country.

     Still no word from the federal Competition Bureau in Ottawa as I filed a complaint regarding the sale of Ultramar gas stations to Irving some time back.

     Places such as Conception Bay South have lost the competition between companies that I believe is costing them lower prices at the pumps as of late. And with the added closure of a Canadian Tire gas bar here beside the Ultramar station , consumers here are pretty much left with three of the larger companies who’s prices have crept up and left one company in more than a dominant position, I believe, in the CBS market particularly.

     The loss of the ValueMax program along the shore, not to mention the benefits of Canadian Tire has meant that consumers don’t have as much say on lower prices. CBS gas station prices are now a few pennies above most prices in St. John’s, a condition that hasn’t happened in years.

      Prices here are still somewhat below the regulated maximum, but not as much as they used to be. I’ll let you know if I do hear anything back...

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, January 24th, 2019

Hi to all,

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

*Heating and stove oil shows an increase of 1.7 cents a litre.

*Diesel fuel shows an increase of 1.4 cents a litre, and...

*Gasoline shows an increase of 1.9 cents a litre.

Keep in mind that “winter blending” may throw the distillate numbers (heating, stove and Diesel) off slightly.

Market highlights

Oil climbs this week, but...

Oil prices increased this week as OPEC cuts started to take hold of the markets, but it may have been short-lived.

     Disappointing economic news from China, along with fears of a worldwide economic slowdown bordering on recession sent oil prices lower today after reaching a two month high of $63 and change on Friday.

      Chinese expansion was reigned in at 6.6 percentage points in 2018, far off from a “usual” nine percent plus. It’s the lowest read on Chinese growth in thirty years.

       That wasn’t the only piece of news that sent oil lower today. The International Monetary Fund, or IMF, also said that projections for world economic growth are lower than previous predictions setting the new number at 3.5 percent from the 3.7 percent previous estimate, indicating a lower demand for crude oil and it’s refined products.

US inventories

US inventories recorded a drop in crude oil stocks for the first time in weeks as crude supplies declined by 2.7 million barrels.

     Gasoline inventories were up by 7.5 million barrels, while distillate stocks increased by three million barrels.

     U.S domestic growth was up another 200,000 barrels with production there now sitting at 11.9 million barrels a day.

Rig count lower

US drilling rigs operating in the field was down again last week as the rig count dropped by 25 according to Baker Hughes weekly count.

     There are now 1050 operating drill rigs in the U.S now, a full 114 more than the same week last year. 

     But with the prospect of oil heading lower, there is a chance that we could see more rigs fold up operations again, sending U.S domestic production lower, and the world economic prospects at the moment aren’t all positive.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, January 17th, 2019

Hi to all,

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

*Heating and stove oil to increase by 3.4 cents a litre.

*Diesel shows an increase of 3.6 cents a litre, and...

*Gasoline shows an increase of 6/10ths of a cent a litre.

Market highlights

Gasoline prices remain on the moderate side as inventories of crude oil still being soaked up by refiners churn out added gasoline stocks that simply aren’t being used. While refiners are enjoying good margins for distillates like Diesel and heating oils, they are also turning out gasoline that for the moment faces no demand pressures like the distillates do. Gasoline spot prices have remained almost steady to a couple of tenths as inventories show lots on hand in the low demand season.

     Margins are also healthy as new regulations around distillate fuels will be coming into force in 2020 as rules around sulphur content take hold. As these new regulations take hold for all distillate users, some are saying there could be a market shortfall of distillate fuels that will increase it’s value as 2020 gets closer, and that is also part reason why we’re seeing elevated prices for those fuels.

U.S inventories

Inventories meanwhile, also are enjoying the upside as gasoline gained 8.1 million barrels in the latest U.S Energy Information Administration report last Wednesday. Refiner capacity remained well above 96 percent and distillates also saw a massive gain of 10 million barrels.

     U.S domestic production increased again, but this time by a barely noticeable two thousand barrels a day, so essentially remaining close to 11.7 million barrels a day.

     The U.S rig count also dropped by seven rigs as the possibility of lower oil prices may be taking a bite out of working rigs. There are 1138 rigs operating in the U.S up to January 10^th.

That’s it for this week!

Regards,

George Murphy

Twitter: @GeorgeMurphyOil

Price changes for Thursday, January 10th, 2019

Hi to all,

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

Distillate prices are subject to “winter blending” so they could potentially be off slightly.

*Heating and stove oils to increase by 1.9 cents a litre.

*Diesel fuel to increase by 2.1 cents a litre, and...

*Gasoline to increase by just 6/10ths of a cent a litre.

Market highlights

Oil rises for the first week of 2019

It is usual for market speculators to look at the first five days of any New Year and make predictions that the year in question will be a good one.

     If that is the case, then the first five days of trading this year may be an indicator that oil prices will rebound somewhat, probably to within OPEC’s target range of $70 US a barrel.

     With oil rising for the first five days, market speculators have sensed that OPEC’s round of cuts will soon take hold and are seeing the December cut in production as being positive for rising oil.

     Markets responded positively to news that OPEC members successfully lowered production by 530,000 barrels a day for the month of December.

Canadian dollar rises

The Canadian dollar increased roughly  three cents against the U.S greenback over the last nine days with the dollar trading at $1.3638U.S on the 28th of December to today’s $1.3293.

      With the rise in the dollar, consumers gained a little with refined product prices. For each penny the Canadian dollar gains, the rough equivalent of close on three quarters to a full penny is saved by consumers.

U.S inventories tell a story

U.S refiners may be looking at adding more refiner capacity just to “soak up” added oil inventories in recent weeks.

     With crude inventories expanding to 441 million barrels in the U.S, almost eight percentage points over their own five year averages, refiners have turned up production to try to bring the crude levels down.

     But are they succeeding in supporting prices?

     While oil prices have increased, West Texas Intermediate prices have not increased at the same rate as Brent prices, with the differential between the two expanding by $4 US with Brent rising faster than WTI.

     Refiners are left in a quandary, that if they can’t export enough to the outside, then they are left to try to refine it to remove it from inventory.

     The problem they have this week in the numbers is that, while crude inventories remained steady, gasoline showed a massive gain of 6.9 million barrels, while distillates showed an increase of 9.5 million barrels. Another such build as this week showed, anything else added may complicate inventories as a consideration to the sell price to the end user in spite of rising oil, and that squeezes margins.

     Refiner capacity was recorded at 97.2 percent with the data for the week up to December 28^th.

      U.S domestic oil production also remained steady through the Christmas holidays at 11.7 million barrels a day.

      That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil