Consumers will catch a break

European Union sovereign debt a factor

Media release

Conception Bay South, NL, June 21, 2011- Consumers of petroleum products will catch a break as European Union member countries, particularly Greece, deal with debt problems. That news comes from the group researcher for the Consumer Group for Fair Gas Prices, George Murphy.

Reality kicks in for investors

"It's back to reality for investors and speculators as ongoing concerns of any economic recovery married with European Union sovereign debt all reign over the markets. For some investors, the US dollar was the only safe haven when they pulled their finances out of oil in fear of a world slowdown caused by Greek, Italian and Portuguese debt-loads. Of real concern is austerity programs that could wreak havoc with the Greece debt and economic recovery efforts", Murphy said.

"Numbers show the start of what I feel is a 'more to come' scenario. If monetary problems persist and Greece doesn't meet her debt payment schedule, then we may see further drops in prices as investors pull out of oil. Right now, investors are caught in a tenuous catch-22 situation where they have no choice but pull money out of oil with a possible economic collapse in Europe. But, if they pour their money into the US dollar as a safe haven, they could cause a slowdown in US exports with an increase in the US dollar value, making their manufacturing sector face a slowdown."

"Markets are very 'bear' right now"...

Numbers

"My numbers show a drop to all fuels is on the way for Thursday morning. I have heating and stove oils down by 3.56 cents a litre while, diesel shows a downwards movement by 3.7 cents a litre, taking a little bit of relief in the distillate group of fuels."

"Gasoline shows a drop of 2.8 cents, but that number, as well as the distillates, do not account for any market volatility that is out there, and it has been volatile!"

"I'm hoping the news in the numbers will carry through for next week. Numbers are already showing a downwards trend, but its continuation will depend mainly on what happens with the European Union's handling of the money crisis amongst member countries like Greece. If she defaults on the first debt payments, it could be 'force majeure' in the marketplace, and we could see investors run. Numbers are already showing signs of another decrease on the way for next week if Greece continues to play in the markets again. Numbers are already showing an even two cents down for all fuels for next week, but it's still a little early to call it. We'll wait and see what happens."

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For more information, contact:

George Murphy

Group researcher/Member

Consumer Group for Fair Gas Prices

Not much change, but the numbers are down

Media release

Conception Bay South, NL, June 29, 2010- The numbers are pointing down. Not by a great deal, but enough that there won’t be a price increase this week, in spite of the market activity last week. That’s from George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

‘I watched the markets closely last week and noticed the glee that must have been on investors eyes when word came of tropical storm Alex’s formation and track into the Gulf of Mexico region, and that put upwards pressure on oil and it’s related and refined commodities,” said Murphy. “But then I saw the downside the past two days when the markets started telling the true story of a stall in any world economy out there. It’s like I’ve been saying all along, that this market recovery is artificial and is boundless. That message has played in on oil prices again.

“Heating and stove oils show a decrease of 42/100ths of a cent, diesel down by a half cent and gasoline shows a drop of just three tenths of a cent. It may not be a big lot, but it may also be indicative of what’s to come next week.

“As of today, it seems that oil and its related commodities have begun another precipitous slide in price. I don’t know how long the message has to be out there before investors and governments finally get it that the world needs cheaper oil to aid any economic recovery efforts and prevent any hindrance to consumer spending. The world economy will not recover fully based on oil anywhere over OPEC’s old 2005 targets, or at prices for refined commodities that consumers and business can no longer afford. That’s the story that is being told in the world markets right now; that Big Oil has killed any prospect of immediate economic recovery happening. The real story of ‘invest in oil’ seems to have reverted to ‘divest from oil.’”

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For more information, contact;

George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices

By the way. The budget was based on $83 US a barrel WTI.
I don't know where they got the forecast, but they didn't ask me.
Numbers so far:
March/10:$81.14 US
April/10: $84.82 US
May/10: $74.18 US
June/10: $75.33 US
Can you say "deficit"?

So, where are prices going from here?

It's a nice summer morning here in St. John's, especially nicer after hearing the news that fuel prices are down; and a lot of questions from people asking if the downwards trend will continue...

Here's hoping! The evidence is certainly pointing towards "steady as she goes" and also "down" in the best of scenarios. If I were an oil trader, I think I would quit, let's put it that way.

Right now, the news is not good if you are an oil man. With waning consumer demand for gasoline and another build in inventories this week, it's hard to wonder why there should be any price increase in the foreseeable future. The fact that North American drivers just aren't buying to the same degree that a lower price should dictate, should be a forewarning to most of the change that drivers are facing. Consumers are not cutting back on consumption because of price, they are doing it out of necessity that the economic situation is bringing to them. Prices for gasoline are now about 35 per cent lower than the same time period last year, yet demand, is recorded at a mere 6/10ths of a percentage point above last years numbers.

Consumers can't spend because of the uncertainty of the ongoing economic recession. I like to call this "enforced conservation" a new economic term you'll soon be hearing about in your favorite business news network or late night TV host!

Enter the ongoing prospect of an oil glut in the markets. While the data from the US Energy Information Administration showed a draw on US inventory, the same still shows a huge 47 million barrel surplus in stock in holding tanks that should be heavily drawn upon during summer months of the past. The word from OPEC is that they produced some 57,000 barrels per day more than their own self-imposed quotas during the month of June and this is only now coming into the North American inventory grid. Talks are abounding of $45 a barrel US oil in August, not heard for a long time during peak summer driving season. Some experts like Philip Verlager are even predicting $20 US a barrel oil and an imminent collapse in prices this winter at best.

Also adding to the downwards pressure on gasoline pricing in the coming weeks is a pick-up in US refinery capacity, up again this week to almost 88 per cent. With added capacity and waning demand, why would I as a trader even bother investing? There's no return here.

The only possibility of upwards pressure on oil will have to come from here but, right now, it's showing just like a St. John's July 16th morning : Nothing but clear skies!

The trend of falling prices might be around for a while. The news from the Alberta oil fields won't be all good if that's the case.

Hope this answers a few questions out there?

Regards,

George