Price changes for Thursday, August 27th, 2020

Hi to all,

 

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

 

*Heating and stove oils show a drop of 6/10ths of a cent per litre.

*Diesel shows a drop of 5/10ths, and...

*Gasoline shows an increase of 2.4 cents a litre.

 

Market highlights

 

Hurricane Laura drives prices

While prices are not moving by a large amount this week, at least for gasoline, the number is more significant than it has been in some time with prices up sharply over the last two days.

     The reason is showing up in the Gulf of Mexico with at least 1.2 million barrels of oil production shut in in the Gulf, and hurricane warnings now posted for an area of the Texas/Louisiana border known for its refining capacity, offloading and pipeline transport of refined products to eastern and northeastern markets.

     In 2005, Hurricanes Rita and Katrina brought disaster to the industry and consumers with elevated prices due to the disruptions in supplies that the storms brought, with a situation where particularly gasoline prices ran out of control in some areas of the country.

     If memory serves, almost 4.8 million barrels a day of refining capacity was put offline for about two weeks, causing skyrocketing gasoline pricing.

     108 oil producing facilities and platforms were destroyed by Rita and Katrina outside of refining infrastructure, whereas no destruction of facilities offshore has occurred as of yet, although 1.2 million barrels of oil production is offline.

     Prices in Canada hit $2.20 a litre in Ontario and a then record $1.53 a litre in the immediate St. John’s area before moderating somewhat two weeks later, but only after some oil infrastructure came back online.

    Some differences between then and now worth noting however, as Rita and Katrina were both category 5 storms and Laura is category 3 as it hits the coast on the Texas/Louisiana border sometime Wednesday.

 

     **Numbers heading into next week are already showing 3 + cents up a litre at release time, that could affect next week’s pricing. However, positive news on oil infrastructure damage after the storm passes may negate this and show dropping prices.

 

Libya peace agreement?

Factions in Libya have reached a peace agreement that could add up to 1.5 million barrels a day to the world oil markets if it holds.

     Also an OPEC country, the agreement may force OPEC to take a second look at overall production at its next meeting as Libya was not included in the initial agreement on cuts made several months ago.

     Libyan exports mainly are exported to European destinations, but some does come into North American markets from time to time.

 

That’s it for this week!

 

Regards,

 George Murphy

Twitter @GeorgeMurphyOil 

Price changes for Thursday, August 20th, 2020

Hi to all,

 

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

 

*Heating, stove oil and Diesel all show a drop of 1/10^th of a cent a litre.

*Gasoline shows an increase of 7/10ths of a cent a litre.

 

Market highlights

 

OPEC meets Wednesday

OPEC will meet again Wednesday in a meeting to revisit cuts imposed on world markets and to reassess how those cuts have impacted the markets.

     The meeting is being watched closely by some speculators for any signs that might point the future prospects of crude. Crude oil, while up slightly with imposed cuts, has not gained any real value as was expected in the face of weak demand during the Covid-19 crisis. If the news from OPEC is seen as flat, then a correction in prices may possibly happen as any negative outlook on prices will affect speculators.

     Meanwhile, the International Energy Agency and OPEC are still saying that demand for this year will be down anywhere between 8.1 and 9.3 million barrels a day as a result of Covid-19 and the world economy.

 

US inventory data

US crude oil inventories were down again in last Wednesday’s inventory report, this time by 4.5 million barrels.

     Gasoline dropped 700,000 barrels, while distillates also lost 2.3 million barrels on 81 percent refiner capacity.

     Interesting to note that US domestic production also dropped by 300,000 barrels bringing US domestic production down to 10.7 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil   

Price changes for Thursday, August 13th, 2020

 

Hi to all,

 

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

*Heating and stove oil to increase by 2/10ths of a cent a litre.

*Diesel fuel shows no changes, and...

*Gasoline shows an increase of just 4/10ths of a cent a litre.

 

Market highlights

Companies buying back oil?

You heard it right.

    During the April storage crisis when prices plunged for West Texas Intermediate, oil companies rented space from the United States strategic reserve. At the time, the companies were successful in getting oil into storage to the tune of 23 million barrels into the Louisiana and Texas old salt mines that were long used for storage in the strategic reserve.

     They had space rented there on the condition they would have it removed again by March 2021.

      Yesterday, it was confirmed by CNBC that seven companies have begun to remove the oil and place it back into regular inventory. The start of the removal process has seen about 2.2 million barrels removed and placed into regular inventory, offsetting some drawdown of stocks that we have seen the past couple of weeks.

       It still leaves a problem of that 20 million barrels that could sway prices. 

US dollar lower spurs oil

Anytime you see a slippage in the US dollar, it’s not unusual to see an increase in oil prices, or any other commodity.

     It has been one of those weeks!...

     Gold climbed well above $2000 a ounce on rising unemployment levels in the US as did oil, but retreated somewhat as some sentiment over growing US employment data as well as rising Covid-19 cases saw gold skyrocket.

     Oil pared any further increases as a result of flattening summer demand. 

US inventory data

The latest Energy Information Administration data is out.

     US crude inventories were down by 7.4 million barrels, while gasoline inventories were up a modest 420,000 barrels on the week.

     Distillate inventories were also up by 1.6 million barrels on 79.6 percent refiner capacity.

     US domestic production was steady at 11 million barrels a day.

     In the meantime, the Baker Hughes rig count was down another four rigs to 247, while 983 were working the same timeframe last year.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, August 6th, 2020

Hi to all,

 

Here’s what I have for price changes for this Thursday, August 6^th, 2020...

 

*Heating, stove oil and Diesel all show a drop of 1.1 cents a litre, and...

*Gasoline shows a drop of 3 cents a litre.

 

Market highlights

 

Covid continues to choke demand

Just when they thought it was safe to go back to their drill bits...

    News of any potential increase in oil prices continues to be tempered by continuing outbreaks of Covid-19 worldwide, especially in the United States as Covid-19 seems to be a huge factor in any economic recovery.

    Word of several outbreaks in Australia, Germany, Spain and the US continues to keep a hold of any meteoric rise in oil prices and demand for most distillates as well as gasoline, has been flattened.

     And with the end of summer coming quick, further drops in demand for transportation fuels, including gasoline, is highly likely.

 

Early winter outlook

With the summer drawing to a close for some, bets on gasoline by speculators usually switches to distillates, like heating oil as the fall and winter seasons contracts approach.

     The colder the weather, the more demand for distillates.

    A look at the data shows heating and stove oil spot prices a rather tidy 13 cents a litre lower than the same timeframe for last year, and if oil prices remaining relatively flat over the next few months, then consumers can expect to pay up to 79 cents a litre, down from the 92.9 they paid at peak winter pricing last year in the immediate St. John’s area.

     However, with Covid-19 holding the possibility of further shutdowns in the future that may keep everyone close to home, demand may increase to close that gap between this year and last year’s pricing.

     I’ll continue to keep an eye to it all!

 

US inventory data

The Energy Information Administration’s latest inventory data is out, and it shows a drop of 10.6 million barrels, leaving inventories of crude a full 17 percent above last years levels.

     Gasoline showed an increase of 700,000 barrels, while distillates were also reported up slightly, but by 500,000 barrels.

     Refiner capacity was recorded at 79.5 percent.

     US domestic production remained steady at 11.1 million barrels a day.

     The Baker-Hughes rig count remained at 251 operating rigs, but down from the 946 that were operating at the same time last year, a drop of close to 75 percent.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil