Price changes for Thursday, January 30th, 2020

Hi to all,



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



*Heating and stove oil to drop by 7.4 cents a litre (5.0)

*Diesel fuel to drop by 7.5 cents a litre (5.1) and...

*Gasoline to drop by 5.2 cents a litre (2.7)



An explainer on these numbers first off.

As the PUB did not make an adjustment to prices, I am hopeful they will institute the price change that would have happened PLUS this week’s changes which equal my total amount. I have written the PUB asking for this method to be used, but no answer yet.

If they average for the whole fourteen day period instead, then the numbers in parentheses will happen. Hence, two sets of numbers.



I’m hopeful for the former to happen as consumers will not see the full benefit of this price drop with a fourteen day average.



Market highlights



Coronavirus fears hit oil hard

Threats to the world economy, in particular demand in China, have hit oil and refined prices hard this last two weeks as the Coronavirus runs its course through China and spreads worldwide.

     With China demand slipping and further risk to the world economy, prices could still drop further if a measure of control of the virus spread is not to be seen.

     First to be hit would be the airline industry as airlines pass on flights to and from China as demand for travel there is seen to drop, tempering the need for aviation fuels.



US EIA inventory data

The latest EIA inventory data shows a very slight drop in crude supplies with it dropping by 400,000 barrels on 90.2 percent refiner capacity

     Gasoline supplies increased again by 1.7 million barrels, while distillates dropped by 1.2 million barrels.

     US domestic production was steady this week at 13 million barrels a day. The EIA also predicted that US domestic output will average 13.3 million barrels a day during 2020.



OPEC+ extends their production cut

OPEC and other non-OPEC producers extended their supply cuts to June in an attempt to stop the slide in oil prices.

     The agreement to cut production was due to expire in March, but a decision was reached that saw OPEC+ extend the cuts another three months.

     The challenge now however, is to support oil in the face of growing sentiment about the world economy as the coronavirus hits economies hard.

     OPEC is also considering a deeper cut to its own production as it wrestles with lower prices due a growing glut in world supplies.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil