Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oils to increase by 3.1 cents a litre.
*Diesel fuel to
increase by 2.9 cents a litre, and...
*Gasoline to
increase by 2.4 cents a litre.
Market highlights
Aftermath of Saudi
attacks
Markets continued
to rise sharply as continuing disruptions in Saudi Arabian oil production
continued to play in the markets.
Initial reports indicated that 5.7 million barrels of daily production was
knocked offline. As this weeks session continued, it appeared, at least by
Saudi reports, that the damage was “easily repaired” and that full production
of upwards of 12 million barrels a day would be available by December, with 5.7
million lost production to be back online by the start of November.
Talks
of returning quickly to full production started a slow retreat in oil that
still supported my predicted increases in refined product prices for this week.
Oil prices, along with refined product prices, continued to decline as Iran
sent signals that it would be ready to make changes to the 2016 nuclear
agreement in exchange for the lifting of some sanctions that have hurt Iran and
its economy. That, combined with Saudi Arabia’s return to full production
helped turn oil prices lower in the session.
As a side note, Houthis rebels from Yemen are also making peace overtures that
have made an uneasy peace in the Middle East in recent days, while at the U.N, Britain,
France and Germany all pointed the accusing finger at Iran for the attacks.
Numbers are showing a slow, gradual retreat for gasoline prices, but still show
some support for distillate prices like heating, stove oil and diesel fuel.
U.S inventory data
The latest report
from the U.S Energy Information Administration shows that 1.1 million barrels
of crude was added to current supplies, while gasoline and distillates also
showed gains in inventory.
Gasoline gained 800,000 barrels while distillates increased 400,000 barrels.
Refiner capacity was recorded at 91.1 percent as some refiners started Fall
maintenance programs.
U.S domestic production was reported at 12.4 million barrels a day.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
Hi to all,
Here’s what I have
for this week’s price changes in what has been one of the most remarkable weeks
I’ve seen in oil in a very long time!
*Heating and stove
oil shows an increase of 1.3 cents a litre.
*Diesel fuel shows
an increase of 1.6 cents a litre, and...
*Gasoline shows a
DROP of one cent.
Market highlights
It’s all Saudi
Arabia and Iran folks!
Attacks against the
Abqaiq production facility and the Khurais oil field were successful in
knocking out 5.7 million barrels of production out of 9.8 million that was
online.
The
Saudi’s have almost 12 million barrels a day of processing at its fingertips
that was already shut down and mothballed because of OPEC cuts. Surprisingly,
the cut to production has not affected fuel prices as much as was first thought
they would be.
While important infrastructure is already well on its way to returning to
normal, the Saudi’s are saying by the start of November before capacity is back
to the original 12 million barrels of production a day. Some of that was already
in mothball as a result of past production cuts.
UN investigators are said to be on the way to investigate the damage to Saudi
facilities, and that itself may be enough to dissuade the U.S from taking any
preliminary action or military intervention with Iran, who are being blamed by
the U.S for the attacks.
Houthi from Yemen have claimed responsibility and promised in a statement
yesterday that more attacks are imminent, so, we may not be out of the woods on
this situation yet.
Local effect
As regards to what
NL consumers will see this week and next is probably all going to be determined
by market factors over the next week. Projections are panning out a little
lower than forecast a day ago. Right now, numbers are showing possible
increases right across the board of 2.3 for heating, 1.8 on Diesel and 2.2 up
for gasoline as a result of elevated spot prices.
Hopefully, with any retreat in oil and refined product prices the next couple
of days, these projections will turn around and show a drop in prices rather
than any possible increase to consumers!
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oils show an increase of 2.5 cents a litre.
*Diesel fuel shows
an increase of 1.8 cents a litre, and...
*Gasoline shows an
increase of 2/10ths of a cent per litre.
Market highlights
Peak oil here?
“Not likely” says
I...
While market
speculators fret over the latest news on US domestic production growth and the
latest rig counts, much is being said that the markets have hit peak production
and demand is still rising. Others say we’ll hit peak production in the late
2020’s.
And while there may be some evidence that US domestic production has indeed stalled
for the moment, it doesn’t mean that we have hit key peak production in the
face of rising demand for oil.
The
facts are simple.
The only thing that is holding back on future increases in production are the
fact that West Texas Intermediate prices are held down because no one wants to
get pumping oil and not make a dollar at it. Production costs are higher than
elsewhere, and Chinese tariffs on U.S exports to China simply don’t help. A low
price for WTI isn’t good if you’re trying to generate interest in U.S shale
reserves.
It’s no wonder Baker Hughes has reported a decline in rigs operating south of
the border in August as compared to July. There were 926 rigs operating against
the July figure of 955, and well down from 1050 in August 2018.
Brent prices have risen slightly as a result of lower production costs,
particularly for Middle East crudes, all in the face of self-imposed production
quotas.
My best guess here is that this is at best a temporary slowdown as rising
prices will bring domestic production up again as more get back into the
markets.
EIA releases
“STEO”: Short Term Energy Outlook
In a monthly
update, the US Energy Information Administration has released its outlook on
both West Texas and Brent crude oil for 2020.
West Texas Intermediate prices are projected to average $56.31 US a barrel for
2019 and stay steady at $56.50 US for the rest of 2020, while Brent prices will
average $63.39 US a barrel for the remainder of 2019 and then average $62 US a
barrel in 2020.
And on another note, the US EIA predicts domestic oil production to grow to
13.2 million barrels a day in 2020 from this year’s average of 12.2 million a
day so far in 2019.
US EIA inventories
The Energy
Information Administration released its latest inventory data last Thursday, a
day later than usual as a result of the Labour Day holiday.
Crude supplies dropped 4.8 million barrels, while gasoline also showed a drop
of 2.4 million barrels.
Distillate inventories were also down, but by 2.5 million barrels on 94.8
percent refiner capacity.
US domestic production was set at 12.4 million barrels a day for the week
ending August 30th.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oils show an increase of 8/10ths of a cent a litre.
*Diesel shows an
increase of 7/10ths of a cent, and...
*Gasoline shows a
drop of 1.6 cents a litre.
Market highlights
U.S-China tariff
dispute heats up
The U.S and China
trade dispute has entered a new cycle.
This week, the U.S
started adding another round of tariffs on Chinese goods with the promise of
more tariffs to come December 15th. That has added concerns amongst
traders that there will be a drop in crude demand in China as the Asian country
faces a downturn in economic output to their largest trading partner.
China was quick to respond.
China also reacted by placing a 10 percent tariff on any U.S oil imports into
China, throwing U.S producers offline and affecting U.S exports of crude.
The Chinese have other places to but crude as most Middle East producers are
shopping their wares to any nation that will take their supply.
Brent crude prices were mainly supported, while West Texas Intermediate prices
fell on the news, stalling U.S domestic growth the past few days since China
placed tariffs on U.S crude.
End of summer
The summer driving
season has come to an official end with the start of the school year now
underway.
Speculators are now placing their bids on the distillate group of fuels while
gasoline has started to slide somewhat from summer highs.
Consumers are at a disadvantage this year as spot prices for heating oils have
not dropped appreciably from last winter’s highs, still ten cents a litre lower
than last winter, but 13 cents higher than August of 2017 and the lead-up to
winter.
On average, prices have crept up by ten cents a litre over the
intervening winter months, so I expect to see heating oil prices to increase
into the winter buying season.
All oil price and distillate inventory dependent, of course.
U.S EIA inventories
The latest
inventory report is out from the Energy Information Administration.
Wednesday’s
inventories showed a draw-down of ten million barrels of crude , while gasoline
and distillate fuels showed a drop of 2.1 million barrels each.
Crude supplies are at the average level recorded over the last five years.
Refiner capacity was recorded at 95.2 percent, up from the week previous,
and U.S domestic production grew last week adding 200,000 barrels to sit at
12.5 million barrels a day.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
