Price changes for Thursday, April 1st, 2021

 

Hi to all,

 

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

 

*Heating, stove oil and Diesel all show a drop of 3/10ths of a cent a litre.

*Gasoline shows an increase of 3.4 cents a litre. This includes the addition of 2.2 cents in carbon taxes for implementation April 1^st.

 

Nova Scotia: So far, looks like 1.1 cents a litre.

New Brunswick: 1.1 plus your carbon tax of 2.2 cents a litre.

 

Market highlights

 

Ever Given the “ever giver”

It’s probably the first time I have heard of one ship having an effect on oil prices like it did, not to be outdone of course by the Middle East conflicts of the sixties and seventies that helped elevate the price of oil with disruptions to the Suez Canal shipping routes.

   The container ship Ever Given has successfully been refloated in  the Suez Canal after six days of cutting the supply route for consumer goods and oil shipments to Mediterranean and European ports.

    Crude oil prices rose $4 US after the ship went aground, but no signs of a retreat in oil prices have shown oil to be retreating at the same speed. Oil did retreat slightly today albeit only by less than $1 US as the Suez Canal went back to operations after the successful refloating of the Ever Given.

 

OPEC to maintain cuts?

OPEC+ countries and Saudi Arabia are rumoured to be in the mood to maintain their present production levels until the end of June month, extending the production cuts that were due to be put back into the markets later in April.

     Citing the slow return of the world economy and a slowing vaccine rollout, Saudi Arabia is not anxious to see any more oil on the markets when it is not being consumed, so it has expressed willingness to maintain it’s own production levels and retain their own million barrel cut in support of the other OPEC+ nations.

     OPEC+ ministers are due to meet again next week.

 

Will US shale take advantage?

US shale production has been increasing with the steady rise in oil prices, but production has yet to offset the price.

     With the rising price of oil,, domestic production from US shale has risen to 11 million barrels a day, still two million barrels shy of last year’s numbers for the same timeframe, and 2.5 million shy of the record for US domestic production set late in 2019.

     Shale producers may be set to take advantage of lost production from elsewhere, including from lost sources of OPEC+ producers.

     US measurements of rig counts showed another nine rigs went back to work over the seven day period last week. While still down considerably from last year, 471 rigs are up and running as of March 26^th, with Canadian rigs up another 11 over the past week.

 

EIA inventories

The latest US Energy Information Administration inventory report from last Wednesday showed crude oil adding another 1.9 million barrels, while gasoline supplies increased by just 200 thousand barrels.

     Signaling warmer weather on the horizon, distillates added 3.8 million barrels.

     Refiner capacity was reported at 81.6 percent, just four 100ths off the numbers before the Texas weather event that knocked refineries offline.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, March 25th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to drop 4.8 cents a litre.

*Diesel to drop 5.1 cents a litre, and...

*Gasoline shows a drop of 6.7 cents a litre.

 

Market highlights

 

Unsteady markets

Both West Texas Intermediate and Brent crude were sent crashing down to reality again today as markets continued to worry over demand concerns as most of Europe and some parts of North America experienced a third wave of the Covid-19 pandemic.

     Oil has been given a hard ride over the past year leaving speculators and consumers reeling at times as oil experienced a wave of crash then recovery, and back to crash again as demand concerns weighed.

      In spite of OPEC announcing earlier this session that it would continue with their line of production cuts until the end of April, the news of covid shutdown through Europe  was enough to question demand.

 

International Energy Agency report

A report from the International Energy Agency late Thursday also sent oil markets into a downward direction with the IEA announcing that due to lower demand recovery and climbing alternative energy vehicle use, oil would not experience a “supercycle” of higher oil prices and that transportation fuels probably have come close to their peak of usage.

     The report should be a signal that alternative powered vehicles including electrics and hydrogen powered and hybrids will be a force to be reckoned with in the years ahead.

 

Does the PUB need a redo?

Last week’s interruption by the Nova Scotia UARB sent gasoline prices south with a drop at the pumps of eight cents a litre a day after their regular price setting that saw prices increase 1.2 cents a litre reflected of the markets in the intermediate days before.

     The same drop was reflected in my numbers two days after our own price setting, however, there is no interruption of prices within the regulations except in extraordinary circumstances such as we saw when gas prices and other fuels drop by as much as 14.4 cents a litre.

     But what is the definition of an “extraordinary situation”?

     Changes in the markets could very well be a financial issue for consumers as well as retailers of fuel. A mechanism where we see such radical changes to the numbers over a short period such as we have seen the last two weeks should be enough to address concerns by consumers as well as retailers who may be hurt by the sudden rise or fall in prices.

     It may be time for a review of the procedures by which the PUB sets prices from week to week, and re-introduce the use of a interrupter clause that could be used in such situations.

     The PUB has been setting prices since 2004 when the Williams administration closed the independent price regulators’ office in Grand Falls-Winsor and moved the oversight of prices to the PUB in St. John’s.

 

EIA inventories

The latest report from the Energy Information Administration showed a build in crude oil of 2.4 million barrels, while gasoline also saw an increase of 500 thousand barrels.

     Distillate inventories gained 300 thousand barrels, while refiner capacity also showed another increase to 76.1 percent from 69 percent the week previous.

     US domestic production was reported at 10.9 million barrels a day last week, unchanged from the week previous.

    

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil    

Price changes for Thursday, March 18th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to rise by 7/10ths of a cent a litre.

*Diesel to rise by 6/10ths of a cent a litre, and...

*Gasoline shows an increase of 2.5 cents a litre.

 

Market highlights

 

Demand outlook becomes uncertain

Oil prices showed a third day of retreat as the world economy looks on new waves of the virus making it’s rounds across Europe. Countries such as France are still about 11 percent below demand where they were last February before the pandemic closed in, and expectations are that another drop in demand is at hand as the third wave goes through European countries.

 

Jet travel could be up-in price

Jet fuel prices have hit the same mark where they were pre-pandemic, but jet travel still remains about 22 percent lower than the same time last year pre outbreak of the pandemic.

     Prices have risen along with speculators beliefs that the world is starting to recover from the pandemic, amidst renewed concerns of a third wave in Europe. As the world recovers, it is believed that more people will travel, especially as vaccines make their way into the population, helping to increase prices well ahead of world travel.

     However, consumers may take the brunt of any increase in jet fuel costs as more fuel surcharges will most likely be levied as a hedge against higher travel costs as people get back to travel again.

 

A record price at the pumps? Not yet.

Prices are forecast to increase again this week by 2.5 cents a litre putting pump prices at an even $1.46 a litre, but it’s not the highest prices we have seen in the St. John’s area.

   In July of 2008, pump prices hit $1.49.3 a litre as oil rose to a record $147 US a barrel, driven by high summer demand. Prices hit a record $1.49.6 in September 2008 and $1.48.1 in September 2005, but as a result of hurricane damage in the Gulf of Mexico area that affected refinery capacity.

   More recently, St. John’s saw a high of $1.44.5 in May of 2018 as the run-up to the summer driving season peaked.

   In the meantime, heating oil prices, while forecast to rise, will still be well below the record of $1.25.6 a litre set in July 2008 when oil prices hit the record of $147 US a barrel for Brent.

 

EIA inventory data

US Energy Information Administration data from last week continues to show a slow return of refiner capacity that could signal a peak in prices for gasoline-at least for now.

     Data indicates that refineries are now back to 69 percent of capacity from a drop from 82 percent just three weeks ago.

     Crude inventories rose by 13.8 million barrels as refinery inputs were affected by outages.

     Gasoline inventories saw a drawdown in stocks as supplies dropped 11.9 million barrels. Distillates also dropped by 5.5 million barrels.

     US domestic production of oil saw an increase of 900 thousand barrels as the US pumped 10.9 million barrels a day, still well down from 13 million barrels a day for the same time last year.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, March 11th, 2021

 

Hi to all,

 

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

 

*Heating, stove oil and Diesel all show an increase of 2.2 cents a litre.

*Gasoline shows an increase of 2.3 cents a litre (5.6 on summer gasoline)

 

I don’t know if summer gasoline is on the markets yet, so that’s why I’m putting it there, but not going with it this week. I believe it comes into effect at the end of the month.

 

Market highlights

 

Oil still rising. Refined prices too.

They’re not at their old record highs ever recorded yet, but the after-effects of the Texas outages two weeks ago are readily apparent in the latest EIA report, and that’s reflective of the same pricing we saw back when Hurricane Katrina hit back in 2005.

     The EIA reported refinery outages that amounted to close to five million barrels a day in production removed from the markets that has continued to drive up prices at the pumps.

     In 2005, refinery outages amounted to a loss of production of one third of US refining capacity (5.6 of 17 million barrels)and took a daily production of 2.2 million barrels a  day of oil off the markets.

     Prices during the week of Katrina hit $1.48.1 a litre in St. John’s with oil at $65 US a barrel. The all-time record here was $1.49.6 set in September of ’08 when hurricanes again ravaged to Gulf of Mexico.

     The Texas weather events of two weeks ago now took almost the identical refining capacity off the markets with the US EIA reporting that capacity dropped from 82 percent to 56 percent during the shutdown and removed temporarily about three million barrels a day in crude oil production offline.

     The next EIA report is due on Wednesday at noon and will give a better indication of how long these prices will last, and how much capacity will have returned-if any this week.

 

OPEC delays increases to production

OPEC, in a surprise move to most, delayed any increases to quotas and production by announcing that increases will be held back until April month, instead of March, leaving oil prices to go nowhere but up.

     Oi prices briefly hit $71 US as another attack against the Ras Tanura facilities in Saudi Arabia also temporarily rattled the markets.

     Expectations were that Saudi Arabia would begin adding their million barrel per day cut back into the markets.

     The only exceptions were to allow Russia and Kazakhstan to increase daily production to meet their won domestic needs.

     On average this week, oil prices increased by $5 US a barrel mainly as a reaction to the OPEC move.

 

EIA inventory report

As expected, the latest EIA inventory report reflected the damage caused by the Texas weather events.

     Latest figures show an increase in crude oil inventories adding a record 21.6 million barrels a day as refinery capacity dropped to 56 percent due to refinery outages. Crude supplies went up as a result.

     Gasoline inventories dropped 13.6 million while distillate inventories dropped 9.7 million barrels as refineries were reported offline.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, March 4th, 2021

 

Hi to all,

 

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

 

*Heating, stove oils and Diesel all show show an increase of 7/10ths of a cent a litre.

*Gasoline shows an increase of 2.3 cents a litre.

 

Market highlights

 

OPEC regular meeting this week

OPEC will have a meeting this Thursday to discuss adding more oil to the markets, but the OPEC Joint Technical Committee(JTC) has been meeting ahead of OPEC’s member meeting to have a look at the market conditions as they sit to see where OPEC+ membership should go with production output increases.

     General consensus at the early meetings seem to indicate that OPEC will increase production through June month by adding up to 2.3 million barrels a day, starting with an increase of 1.4  million barrels in April month, rising to 2.3 by the end of June.

    No sign of whether Saudi Arabia will add their own production cut of a million barrels a day back into the mix, but the consensus seems to be forming that any additional production will be met with a close examination of world economic recovery as it sees recovery continuing with more Covid-19 vaccine availability.

     23 nations form the OPEC+ group.

 

Oil glut quickly disappearing?

A glut of oil left on the markets after a deep drop in consumption left by the Covid pandemic is seemingly disappearing, sparking a concern from some that the world could be left to pay higher oil and refined prices if OPEC+ does not address the supply crunch that could be coming.

     Countries such as India are warning that any harsh increase in oil prices will damage a weak returning world economy, and some are bullish on the prospects of Saudi Arabia putting back the million barrels a day they cut in February as a measure to prevent any rapid increase in oil prices.

 

Toyota unveils new fuel cell

Toyota’s entry into the hydrogen/electric vehicle market is looking to become a gamechanger in the hydrogen powered vehicle industry.

     Toyota unveiled a new fuel cell that will increase the range in its Mirai to almost 650 kilometers, giving Toyota the advantage of being a major supplier of fuel cell technology that it hopes will make it a industry leader in hydrogen fuel cell technology in the coming years.

    

US EIA inventory report

The latest inventory report from the Energy Information Administration is out and it showed a modest build in crude oil inventories of just 1.3 million barrels.

     Gasoline inventories remain unchanged while distillates were down five million barrels.

     US domestic production was reported at 9.7 million barrels a day, well down as the Texas freeze was shown to take hold in the inventory figures.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil