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Tuesday, September 24, 2019

Price changes for Thursday, September 26th, 2019

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!


George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, September 17, 2019

Price changes for Thursday, September 19th, 2019

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!


George Murphy

Twitter @GeorgeMurphyOil 

Tuesday, September 10, 2019

Price changes for Thursday, September 12th, 2019

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!


George Murphy

Twitter @GeorgeMurphyOil 

Tuesday, September 03, 2019

Price changes for Thursday, September 5th, 2019

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!


George Murphy

Twitter @GeorgeMurphyOil