Price changes for Thursday, February 6th, 2020

Hi to all,



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



*Heating and stove oil to drop 3.7 cents a litre.

*Diesel fuel to drop four cents even, and...

*Gasoline shows a drop of 1.3 cents a litre.



Market highlights



Corona virus hits again

The Corona virus still is the talk of the markets this week as weakening China and Asia demand hits oil and distillate fuels hard.

     With airlines curtailing flights into and out of China for the next while, distillate demand is also getting a hard hit as demand drops sharply for jet fuels in Asia. United Airlines is the latest in a string of overseas airlines that have curtailed flights into and out of China, and that has added to oil’s woes.

      On the oil side, as the economy has almost shut down in some areas of China, so also has the demand for oil imports as the economy slows. And with no sign as of yet that the virus is slowing, then so goes the fall of oil prices.



North American demand

Here in North America, markets are starting to turn towards the coming spring and that brings another factor into play as spring draws closer, bringing with it the prospects for warmer temperatures.

      It’s usually this time of year we start to see a first sign of spring: where speculators look at the calendar to see the end of winter approach, and with it, the prospects for warmer weather and dropping demand for heating fuels. That in itself sees waning demand also for distillates, exacerbated by the weather as well as lower demand in China due to Corona.

     As speculators start the move from distillates, attention goes toward gasoline, still showing some support even as oil prices fall. And even though gasoline is still dropping, the fall is not as prominent as that of distillate fuels.

    However, the move to gasoline may have already started as refiner capacity was reported down by a good five percent from the week previous, possibly caused by upcoming spring refinery maintenance.



EIA inventories

The latest US EIA inventory report is out and the news continues to show builds in crude oil inventories with supplies gaining 3.5 million barrels.

     Gasoline inventories continued a string of builds, this time adding 1.2 million barrels, while distillates dropped 1.3 million barrels.

     Refiner capacity was reported at 87.2 percent and US domestic production remained at 13 million barrels a day.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil