Price changes for Thursday, February 25th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 1.7 cents a litre.

*Diesel shows an increase of 2.1 cents, and...

*Gasoline shows an increase of 3.9 cents a litre.

 

Market highlights

 

Oil and refined prices continue to rise

Crude oil and refined product prices continued to rise this past week as Texans dealt with a severe weather system that devastated the state’s electrical system, knocking out almost 1.1 million barrels a day in refining, and also taking out crude oil production estimated now as much as two million barrels a day as pipelines and related infrastructure froze up.

     Temperatures went as low as four degrees Fahrenheit and winter weather pounded electricity users.

      Some refining infrastructure may come back online soon though, and that may bring back some promise of lower prices as prices south of the border have risen as much as thirty cents a gallon there. Some refiners are reporting that they may not be back online and in production for another month.

      Electricity costs have also skyrocketed, costing as much as $9000 for a  megawatt of electricity.

 

Saudi’s and Russia clash on oil?

According to Oilprice.com, the Russians and Saudi Arabia may be about to clash again over the sudden rise of oil prices and the timing of a return to production cut between OPEC+ and Russia.

     While Saudi Arabia wants to keep cuts at their present levels heading into April month, the Russian energy minister Alexander Novak is on record as saying that the current price of oil is reflective of the market conditions and that markets have returned to balance.

     Russia and OPEC+ will meet again March 3-4^th to discuss the condition of the markets where it is believed that the Saudi’s will use their million barrel cut in production as a bargaining chip to attaining a new deal on production at next week’s meetings.

     Oil prices have risen sharply and has led some OPEC+ members to seek higher production levels to take advantage of the price increase.

 

US EIA inventory report

US crude oil inventories dropped 7.3 million barrels in the US EIA inventory report up to February 12^th.

     Gasoline supplies increased by 700 thousand barrels and distillates dropped 3.4 million barrels on 83.1 percent refiner capacity in the week ahead of the Texas blackout.

     US domestic production was reported at 10.8 million barrels a day for the same week.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, February 18th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 1.8 cents a litre.

*Diesel and Gasoline both to increase by 2.1 cents a litre.

 

Market highlights

 

Texas freeze drives up prices

US refineries in Texas have been taken offline by extreme cold and electrical failures after a deep freeze struck the refining state over the past few days with temperatures in the single digits Fahrenheit.

     Temperatures were recorded as low as four degrees as the winter cold brought arctic air over the state, causing power failures that have taken half of the state’s electricity offline.

    Oil prices gained on the news as refined prices also took a climb as speculators chimed in on lost refiner capacity that could last until the cold temperatures abate and electrical repairs are made.

     It’s the first time in recent memory that I can remember capacity issues caused in Texas due to cold weather. Usually it’s all about hurricane damage. Gasoline price s have risen by 13 cents a US gallon since last Wednesday on the weather event.

     In the meantime, electricity costs in the southwestern US also took a hit with electricity prices ranging upwards of $9000 a megawatt hour from an average of $25 a megawatt hour.                             

     According to Oilprice.com, a Tesla costs about $900 to charge up under these prices.

 

Storm hits domestic production

Connected to the weather in Texas, the Permian Basin, an oil producing region near the Texas Oklahoma border also has had production disrupted, removing almost one third of US daily production out of the markets.

    Estimates are almost 3.5 million barrels a day of production has been removed from the US total domestic production numbers of 10.9 million barrels a day, causing the rise in oil prices as well. Production is not expected to return to normal levels until sometime around February 22^nd. This could be around for a bit.

 

US EIA inventory data

US refiners continued to chew into oil reserves last week (before the storm) as crude oil supplies dropped 6.3 million barrels.

     Gasoline stocks increased 4.3 million barrels, while distillates dropped 1.7 million barrels.

     Refineries operated at 83 percent capacity, just seven points below the normal before Covid hit last year, indicating higher demand.

     US domestic production was reported at 10.9 million barrels a day (pre-storm).

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, February 12th, 2021

 

Hi to all,

 

Here’s what I have for this week’s price changes, all data in:

 

*Heating and stove oil to increase by 3.5 cents a litre.

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

*Gasoline shows an increase of 2.5 cents a litre.

 

Market highlights

 

Hedge funds betting on summer

It’s not just about refiners having troubles moving product that has increased costs, and thus prices for consumers, but word is out that hedge funds are starting to bet on vaccine distribution that will help increase prices for oil and refined products as demand picks up right along with Covid-19 vaccine availability.

     Here in Canada, Prime Minister Justin Trudeau made an announcement that the Pfizer vaccine will amount to 20 million doses by the spring at the time when traditional run-ups in prices really starts to catch for gasoline, bringing with it upwards pressure on prices.

     To quote from the Reuters story,

   “By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters,” said David D. Tawil, co-founder at New York-based event-driven hedge fund, Maglan Capital, and interim CEO of Centaurus Energy”.

      Oil prices have increased $4 US a barrel over the last week.

 

Oil to increase to $100 US?

It’s a bold prediction, but again precipitated on word of further covid-19 vaccine rollout as markets have turned their attention to the futures markets and speculators play with the scenario of returning demand.

     That means hopes for our offshore as oil will rebound-if the predictions from Amrita Sen of Energy Aspects is right.

     Speaking to Bloomberg, he said that while, right now, the markets have gotten ahead of themselves with demand still weak, vaccine rollout has the promise of increased demand in the second half of this year.

     The only mitigating factor may very well be how many producers get back into the market of production, and how fast the US production figures will be in turning back to full production pre-covid.

     US domestic production was recorded at 10.9 million barrels a day, falling from 13.5 million barrels a day the same time last year.

     Also, Saudi Arabian production is due to pick up again, adding a million barrels a day by the end of March, putting some pressure on growth.

 

US EIA inventories

The latest report from the Energy Information Administration, crude oil supplies dropped by a million barrels last week.

     Gasoline inventories were up by 4.3 million, while distillate inventories remained unchanged from the week previous.

     Refiner capacity was recorded at 82.3 percent and US domestic production reported at 10.9 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, February 4th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 1.7 cents a litre.

*Diesel to increase by 1.6 cents a litre, and...

*Gasoline to increase by 1.8 cents a litre.

 

Market news

 

Markets continue to tighten supplies

Crude oil prices continued to increase this week as markets were seen to tighten supplies as Saudi Arabian cuts to production have started, with the Saudi’s promising to cut an additional one million barrels of production a day that started February 1^st.

     However, markets have been watching the possibility of another developing situation where the Saudi’s may lose market share as others jump in to fill the need left open for oil by the Saudi cut. Other oil producers like Guyana and US shale producers could be set to increase production to fill the gap immediately left by the OPEC country that left the markets with a shortfall of oil for the next two months.

     The Saudi’s are set to keep production down until the end of March 2021.

 

Goldman Sachs increases estimates

Goldman Sachs expects oil consumption to have a robust rebound to at least 100 million barrels a day by the end of August, back near levels not seen since the start of the pandemic.

     According to Goldman Sachs, oil supplies faced a deficit of close to 2.5 million barrels a day in the last quarter of 2020 that helped set prices for crude in the upwards direction. The only factor that could limit to forecast on future demand are new outbreaks of Covid-19.

 

US crude oil inventory report

The latest Energy Information Administration inventory report showed another drop in crude oil inventories last Wednesday as refiners continued to maintain capacity levels above the eighty percent mark for the fifth week in a row. Capacity was reported at 81.7 percent that maybe indicative of slowly returning demand.

     Gasoline inventories were reported up by 2.5 million barrels, while distillates were down 800 thousand barrels.

     US domestic production was down 100 thousand barrels a day to 10.9 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil