Hi to all,
Here’s what I have for this week’s price changes:
*Heating and stove oil to decrease by 3.6 cents a litre.
*Diesel shows a decrease of 4 cents a litre, and...
*Gasoline shows a decrease of 3.4 cents a litre.
Market highlights
Oil markets have hit a stall...
Caught between the possibility of a slowing world economy, a new oil glut and an extension of the U.S-China tariff dispute, fears for dropping oil prices far exceed the possibilities of any increase.
Or, at least that’s the way I see it.
Evidence south of the border shows another good build in U.S inventories last week, along with growth in U.S domestic output, bringing with it dropping supply fears as oil has no takers and nowhere to go.
U.S inventories showed a build in crude oil inventories of 4.7 million barrels and remain about four percent above the same period for last year.
Gasoline inventory also showed a good build of 3.7 million barrels with capacity measured at 89.9 percent. If people aren’t buying with capacity lower than expected, then it’s reasonable to assume that demand is not as great as expected, even in the face of lower production.
A good measure on where prices may be going as a result, is lower. Demand has to pick up to keep prices elevated.
But this is not unusual, so, while there may be some hope, I exude caution in the face of dropping prices. It’s not unusual, even after the start of the summer driving season to see prices moderate a little as, sometimes I’ve seen two spikes in prices-immediately ahead of the U.S Memorial Day weekend just passed, and immediately during the start of hurricane season.
Also an important factor in the markets the last couple of weeks is the bruhaha between the U.S and China as talks enter a new phase.
As China has promised retaliation should additional tariffs be charged to Chinese goods, there comes the possibility that China will slow down any shipments of rare earth minerals needed in technology development, possibly sparking a slowdown in the tech sector.
Analysts also predict a slowdown in the Chinese economy of tariffs are placed, citing the possibility of slumping Chinese demand for oil as a result. If demand there falters, then oil prices will slip further, along with refined commodity prices.
That’s it for this week!
Back in the saddle...
Regards,
George Murphy
Twitter @GeorgeMurphyOil
