Hi to all,
Here’s what I have
for price changes for this Thursday:
*Heating and stove
oil to increase by 4/10ths of a cent a litre.
*Diesel fuel to
increase by 5/10ths of a cent per litre, and...
*Gasoline to drop
by 4/10ths of a cent.
Caution here: As
winter blending is a combination of jet fuel and #2 in heating and Diesel
fuels, there is a strong likelihood that heating and diesel will drop as a
result of falling jet fuel prices.
Carbon taxes may
also come into effect for gasoline, turning it 1.5 cents a litre up this week.
Market highlights
Saudi Arabia and
Russia still at it
Both Russia and
Saudi Arabia are still pumping oil as fast as they can ramp up production as
the world turns eyes to faltering economies in the face of the Corona virus
outbreak.
With world economies slowing, it is estimated that world demand has dropped by
10 million barrels as of the second week of March, much to the chagrin of two
nations who refuse to believe there’s a problem.
Estimates by IHS
Markit suggest that the demand destruction could amount to almost 20
million barrels a day, well down from the peak of 98 million barrels a day
projected for this year.
Saudi’s set to
produce more
According to OilPrice.com,
the Saudi’s are preparing to ramp up exports by another 600,000 barrels a day
starting May 1st in an attempt to flood the markets and recapture
market share.
Production
will also be set to increase by 250,000 barrels a day by then with Saudi Arabia
reaching 10.6 million barrels a day in production.
Refiners shuttering
in production
North Atlantic
Refining isn’t the only refinery forced to idle.
With gasoline margins in negative territory and jet fuel demand down 70 percent,
major companies are shuttering refineries, or throttling back production close
to 60 percent south of the border.
Valero Energy, Marathon and Philips are all reducing production and throughput
rates as gasoline is manufactured for less than the price of a barrel of oil
with gasoline demand down a clear 50 percent.
Jet fuel prices
continue to sink
As reported by the International
Air Transport Association weekly report, jet fuel demand for North America
sunk to a historic low as demand fell 59.2 percent versus the same time last
year, and jet fuels sold for 26 cents a litre.
World demand fell by close to 62 percent worldwide versus the same time last
year.
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 to drop by 1.8 cents a litre.
*Diesel to drop by
1.5 cents a litre, and...
*Gasoline to drop
by *10.1 cents a litre
*Again, I can’t
attest to the accuracy in the gasoline number, but it did trade that low
before...Two occasions...1986 and again in August 1998. As low as 15.7 cents a
litre in Monday trading.
Market highlights
Demand destruction
complete
Again this week, a
sign that gasoline has finally met complete destruction as people are home and
no gas is being consumed.
With
the world facing the Covid-19 virus fight, a fight for our very lives, markets
turned upside down with cars parked and refineries with product with absolutely
nowhere to go.
Since February 25th, the last time we saw prices increase, I have
witnessed gasoline spot prices drop an astronomical 57 cents a litre to 17
cents a litre on the markets as of business day ending Tuesday.
That’s
forty cents plus taxes.
Refiners about to
pay the price
As demand dies for
most petroleum products, refiners are soon going to start to feel the pinch
with predicted shutdowns of US refiner capacity in the works.
Estimates in the US are accounting for a 30 percent drop in refiner capacity as
demand wanes for most products, gasoline particularly as people get shut in
with the shutdown of the US economy. Demand for gasoline could see a drop of 50
percent south of the border.
And while refiners are dropping capacity, they still worry over getting rid of
supplies now on hand. Some support remains for distillates as heating oil and
diesel remain with some demand, but jet fuels fall into disfavour as flights
remain grounded.
Word has it that North Atlantic Refining has already laid off some people as
refiners try to find ways to survive the downturn that has the potential to
close some facilities along the US Northeast seaboard and the Gulf of Mexico.
March 2, 2020 shortly before the collapse, US EIA figures showed Americans
burned a record high 9.5 million barrels a day
“It
will cost you more for the plastic container than for the gas you put in it”.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
Hi to all,
Here’s what I have
for this Thursday’s price changes:
*Heating and stove
oils to drop by 2.8 cents a litre.
*Diesel to drop by
three cents a litre, and...
*Gasoline to drop
by six cents a litre.
Market highlights
OPEC and Russia go
head to head
There’s no sign of
Russia or OPEC backing down from their promises to flood the markets with
crude, and it looks like flooding the market may have been intended all along.
New figures on OPEC production for the moth of February show that Saudi Arabia
may have been already gearing up for greasy combat with other producers as the
lead OPEC member produced 36,000 barrels a day more than intended.
Not unusual to see a member overdo it, Saudi Arabia was always the member who
policed the others into maintaining production levels and stuck to its own
quotas quite rigidly since signing the initial production cut agreement in
January 2015.
Tankers wanted: now
at a premium
Word has it that
tanker rates are rising amid signs that the Saudi-Russia oil war has begun.
Shipping rates have increased over six hundred percent as mainly Saudi sellers
are using every tanker and sending them off to markets in Asia and Europe at
the rate of over two million barrels a day in an attempt to grab market share
from Russia by flooding the markets with cheap product.
Saudi Arabia announced last week that it would sell oil at discounted rates to
preferred customers.
Jet fuel demand
weakens
While the COVID-19
virus takes hold and people head home to isolation, strong signs of how much
impact the virus and economic meltdown is having are becoming readily apparent.
The International Air Transport Authority is reporting
a larger than normal drop in the important motive fuel in weekly, monthly and
year to year data.
Weekly data is showing that the industry is slowing at a rapid pace with demand
for product down 23.8 percent over the last week, 39.7 percent from last month
and an astronomical 47.8 percent from the same time last year.
That’s just North American travel. The rest of the world averages close to the
same.
Prices
have averaged 37 cents a litre over the last week. With no one flying, expect
these prices to drop further.
Word I am getting is that jet fuel stocks are filled to the rim with nowhere
else to put refined inventories, including at North Atlantic Refining in
Placentia Bay, NL.
Space
is running out in the face of collapsing demand everywhere, another sign that
shows the world was very close to a glut situation before the crude oil price
war started.
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
oil to drop by 4.6 cents a litre.
*Diesel fuel to
drop by 4.6 cents a litre, and...
*Gasoline shows a
drop of 3.5 cents a litre.
My averages still
indicate further drops for next week already in the pipeline as spot prices for
gasoline remain 6.5 cents less than the price change for this week, and 3.5
cents down from the average for heating and diesel fuels. We haven’t hit bottom
yet in Newfoundland and Labrador. There’s plenty of space for retailers to drop
prices further from the regulated maximum.
Market highlights
OPEC-Russia oil
price war
The news is
dominated by a Russia and OPEC oil price war and both sides are ready to pump more.
Or should that read Saudi Arabia and Russia?
Both countries are supposedly at odds after talks broke off on further cuts to
production on Saturday, and Saudi Arabia said it would drop all production
limits. With OPEC now backed into a corner, it is Saudi Arabia mounting back to
full production, with the Saudi’s with the most production capacity to let
loose by.
Saudi Arabia is already producing 9.5 million barrels a day with capacity that
it can ramp up to hit 12.5 million barrels a day of production as early as
three months from now.
The Russians are able to harness 300,000 barrels in an instant with another
200,000 barrels worth of capacity to spare. They're presently pumping 11.3 million barrels a day according to my last data.
The losers in all this may be the resilience of small producers in the US shale
industry who are dealing with higher production costs.
Corona virus still
hitting hard
The Corvid-19 virus
is taking its toll of refined demand and demand for crude oil itself is now at
a bargain, prompting some to buy and store at low prices, if not consume it.
But consumption has dropped worldwide with a noticeable drop in some
distillates, like kerosene, which being close to jet fuel, is readily apparent
as the airline industry is taking a hit as a result of the Corona virus.
Prices
for the refined product lost close to 32 percent compared to the same timeframe
for last year according to the IATA (International Air Transport Association)
and down 18 percent over the last month since the Corona breakout.
US EIA inventories
The latest report
from the Energy Information Administration still shows low refiner capacity as
refiners are slow to come back online from spring maintenance programs, and
what’s the rush?
Refineries operated at 86.9 percent of capacity as crude oil gained 800 thousand
barrels of stock.
Gasoline inventories took a dip as 4.3 million barrels were taken from
inventory and 4 million barrels dropped from distillate stocks.
US domestic production was pegged at 13.1 million barrels per day with still no
sign of affects of Corona.
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, but with a warning: AS MARKETS HAVE BEEN
EXTREMELY VOLATILE, I CAN’T ATTEST TO THEIR ACCURACY.
*Heating and stove
oils show a drop of 5.6 cents a litre.
*Diesel fuel shows
a drop of 5.8 cents a litre, and...
*Gasoline shows a
drop of 7.1 cents a litre.
Market highlights
Corona virus doubts
play hard in the markets
Markets showed
extreme volatility over the regulatory period with wild swings through the
week, working spot prices from extreme lows, only to show signs of price
recovery as markets recovered again.
The extreme volatility has played into everything from spot prices for refined
commodities to everyday reliables like gold.
Markets for refined product are showing that there is a projected drop in
demand with the onset of Corona that has become a factor now in pricing. Two
weeks ago, there was some question as to how Corona would affect prices,
especially knowing that demand would slip there. While I predicted a drop in
prices, it took some time to take hold. And oil and refined products aren’t out
of the woods yet as world economic worries also hit the markets hard as a
result of Corona concerns.
China demand slips
again
While demand for
refined products remains down about 35 percent, overall Chinese oil demand has
dropped by 3.5 million barrels a day, a drop of 15 percent that has to go
somewhere. While Chinese demand falters, that crude has to somewhere, and
that’s also part of the problem.
However, that doesn’t necessarily mean that China is not buying oil while
Corona reigns. Word is that they have been buying at bargain prices in the hope
of a turn-around as they move away from the Corona virus several months down
the road. Demand may be down, but they’re still buying-for now.
OPEC+ responds?
OPEC and other oil
producing nation will meet again March 5 and 6th to discuss the
potential of production cuts. Russia is said to be thinking it over, but
Vladimir Putin is on record as stating that “Russia is happy with prices at
present levels.”
That puts OPEC into a corner if Russia holds back as OPEC could face the
potential of upwards of a million barrel per day cut to try and support prices
with Russia’s help.
And while they discuss cuts, OPEC has to realise that it may be in a no win
situation as Corona virus cuts demand to everything from manufacturing to
travel and shipping and could pound markets for months. While they struggle
with that, they also face the prospect of a build in world supplies of crude, a
two-fold issue.
Prospects of a cut ran through the markets the past few days that initially
helped support oil prices, giving oil and refined commodities a modest boost.
600,000 barrels a day seems to be the number that has been kicking around the
markets the last couple of days.
Due this week:
OPEC meets March
5-6th
US EIA inventories:
Wednesday noon
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
