Price changes for Thursday, January 28th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to drop by a half cent a litre.

*Diesel shows a drop of 3/10ths of a cent, and...

*Gasoline shows an increase of a half cent a litre.

 

Market highlights

 

Markets are showing crude mostly steady this past week as they weigh the impacts of Saudi cuts of an added million barrels a day due to start February 1^st, and with Russia and Iraq also cutting back on exports by an added 300,000 from Iraq, the markets are beginning to show signs of tightening crude oil supplies amidst the covid-19 pandemic.

 

Average prices may be up here, but...

Irving Oil has applied to the New Brunswick EUB (Energy and Utilities Board) for an immediate increase to all fuel prices that would rank with increases that consumers saw through the Public Utilities Board here from NARL’s request for immediate assistance two months ago.

      Irving says that it has faced severe difficulties with its company as margins have tightened against rising costs and lower demand. They have applied for an increase of 4.09 cents plus taxes on motor fuels and a 3.02 cent a litre increase to heating fuels. These numbers are about eighty percent of what they have asked for in a scheduled hearing due to happen in March.

      The hearings into the application will continue next week as more information from Irving is wanted.

       Story here: Irving Oil request for 'urgent' wholesale price hike stalls over redacted evidence | CBC News

         Refiners everywhere are facing the same problems with jet, distillate marine and transportation fuels all being hit hard from the Covid-19 pandemic with some refiners worldwide shutting their doors or reducing their production markedly.

 

US EIA inventories

The Energy Information Administration is reporting another build in US crude inventories in last week’s reporting, adding another 4.4 million barrels to crude stocks.

     Gasoline inventories were down by 300 thousand barrels, while distillates were up 500 thousand barrels.

     Refiner capacity was reported at 82.5 percent as refiners tried to chew into inventories.

     US domestic oil production was reported at 11 million barrels a day, down two million barrels a day from the same timeframe last year.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, January 14th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 2.9 cents a litre.

*Diesel to increase by 3.2 cents, and...

*Gasoline shows an increase of 4.4 cents a litre.

 

Market highlights

Markets have been responding all week to the Saudi surprise oil production cut immediately after last week’s OPEC+ meeting where Saudi Arabia announced a further cut to their own production of an added one million barrels a day.

    Further support for higher oil was also featured in last week’s Energy Information Agency report which showed a huge drop in crude oil inventories of almost eight million barrels.

    Oil prices have been well up after the meetings with oil prices rising another $5 US a barrel over the intervening timeframe. Expectations of a tightening oil supply situation has helped increase prices as the surprise cut is said to be well above expectations of the markets.

     Brent prices closed close to $57 US a barrel today, rising from $51.80 US last Tuesday.

    

OPEC compliance drops

According to Petro-Logistics, OPEC+ compliance amongst its members fell to just 75 percent after some countries were seen to break away somewhat from imposed quotas ahead of last week’s OPEC+ meeting, but you couldn’t tell by oil’s reaction as figures were only released today.

     Other companies have had higher OPEC+ compliance numbers the past few days with numbers in excess of 75 percent.

     OPEC and non-OPEC members agreed to a 9.7 million barrel per day cut several months ago, but added more oil to the markets over the intervening months.

     Total cuts now amount to 7.7 million barrels a day amongst members as of December.

 

Refiners may still pay a price

According to reports from the International Energy Agency, worldwide refinery capacity is still over 20 million barrels over the needed capacity worldwide.

     Over 1.7 million barrels a day of refinery production capacity has been permanently closed worldwide since the start of the pandemic and it remains to be seen if it will ever return based on how alternatives have been impacting the markets.

      With countries now putting timeframes on the end of new fossil fuel vehicle sales by 2030 to 2040, it now remains in doubt whether any capacity will return, or any refineries to re-open again within the highly competitive refining markets.

 

US EIA inventories

The latest numbers are out from the US Energy Information administration.

     Crude supplies showed a drawdown of 8.1 million barrels, while gasoline inventories saw an increase of 4.5 million in the week after Christmas.

     Distillates also saw an increase of 6.4 million barrels.

     Refinery capacity was recorded at 80.7 percent, while US domestic production was steady at 11 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, January 7th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to drop by 6/10ths of a cent.

*Diesel to drop by 7/10ths, and...

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

 

Market highlights

 

Saudi’s surprise

OPEC schedules meetings that are meant to come to some form of consensus on the world regulation of oil supplies, but this time around was different.

     With OPEC ok with a modest increase in production to world supplies from Russia and Azerbaijan allowed an increase of 65,000 barrels a day each to meet domestic needs, Saudi Arabia announced that it would cut production by another one million barrels a day starting in February.

     While that announcement lit a fire under crude prices, outside conditions may prove to be detrimental to the Saudi move.

      With US domestic production offline, it has been given a good reason for a sharp return in the coming weeks from it’s current low of 11 million barrels a day. My guess is a timeframe of a couple of weeks where we will see a measurable return of US domestic production to meet the shortfall.

     After all, the spigots were only recently turned back while Covid rages, and could be turned back on in short order to meet the shortfall.

 

Year in review Part II

Oil continued a downturn as prices hit rock bottom. But a turnaround was soon to take place in oil prices’ slow recovery with the first announcement of a covid-19 vaccine by Oxford University, soon to be followed by announcements from Pfizer and Moderna. Oil was given a spark as anticipated demand was the prop the markets were looking for to begin July.

     August saw “peak oil” announcements from BP and Conoco Philips, with BP announcing that oil may have already peaked and oil demand dropping to 55 million barrels a day by 2050.

     Hurricane’s Laura and Zita both create production shutdowns and temporary disruptions to US domestic production numbers.

 

     September saw the provincial government announce enhancements to the provinces’ offshore drilling program with money to supplement any programs that would be undertaken by participants.

     September 25^th also saw the federal government give $320 million in aid to the oil industry through the province that formed a reason why the Oil and Gas Recovery Task Force was formed. That announcement would be a key cornerstone of how best to spend the money as part of the mandate of the task force.

     The announcement of the Oil and Gas Recovery taskforce with terms of reference will be due to report back to government by the end of January 2021.

    

     Oil prices continue a slow rise to $42 US by the middle of October with further word of the coming availability of the Covid vaccines to the population.

     Locally, the North Atlantic Refinery applied for an increase through the Public Utilities Board as an emergency measure to keep retailers in business as they had, in essence, had to rely on imports from outside of the province.

 

     November saw increasing oil prices as release dates are set for the first Pfizer and Moderna vaccines to the world market, while in Quebec, the government there announces a ban on new fossil fuel vehicle sales will come into effect in 2035 with the province joining California as the other jurisdiction bringing in the law to combat carbon and climate change.

     Three more refineries close with the closest in New Jersey. Closures total 14 in North America and Europe with many more throttling back on production or converting to other fuel types.

 

     December saw Brent rebound to break $50 US a barrel on continuing hopes of the covid-19 vaccine and future anticipated demand.

     Locally, support for both the Hibernia platform and a continuation of their drilling program, and a support program for the West White Rose projects were announced.

 

US EIA inventory data

The EIA is reporting a drop of 6.1 million barrels of crude up to December 25^th and a drop of 1.2 million barrels of gasoline stocks as a result of Christmas travel and elevated demand.

     Distillate stocks increased 3.1 million barrels on 79.4 percent refinery capacity.

     US domestic production was recorded at 11 million barrels a day, unchanged from the week previous.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil