Price changes for Thursday, March 16, 2017

Hi to all,

Here’s what I have for this week’s price changes, baring in mind that winter blending mat throw off the distillate numbers slightly from the actual that may occur.

*Heating and stove oils show a drop of 3.1 cents a litre.

*Diesel shows a drop of 3 cents a litre, and...

*Gasoline shows a drop of just 2/10ths of a cent a litre.

Market highlights

Focus off distillate turning to gasoline

     If you were a speculator in the distillate market, you didn’t make a pile of money, but you didn’t really lose either. Both ways you look at it, prices were moderate, even to some consumers.

     But it’s time to pull out now, and as you do, you turn to the gasoline markets where, hopefully, you’ll see a rise in demand as spring and early summer comes on.

     So, while consumers should start to see some expected drops in distillate prices here into the summer, those same consumers begin to see some support for gasoline: just part of the reason why no big drop in the gasoline markets this week.

     But don’t expect too much pressure yet, mind you!

     Until consumers see an uptick in demand, expect no immediate growth in gasoline prices this summer. With near-record inventories of gasoline out there this spring ahead of the switch-over from distillate to gasoline, there’s going to be reason for concern for refiners and Big Oil when refineries begin turning out more gasoline for consumption.

     What’s bad for them though, is not necessarily a bad thing for consumers...

OPEC blinks

     OPEC member Saudi Arabia reported today that they secretly increased production upwards from January adding another 260,000 barrels a day to production.

     The Saudi’s produced 10.1 million barrels a day, from 9.8 million barrels a day in January.

     Now, if I were a betting man, I’d put my money on one simple reason: That U.S shale has become a bigger influence on OPEC oil policy than anyone realised. My guess is that, adding a little oil to the markets is an attempt to “taper off” US growth in domestic oil and still allow them to survive.

     It’s a “warning”...

     What OPEC does in the next two months will be determined by what U.S domestic in the next two weeks with domestic production figures when they are released by the US Energy Information Administration.

     That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, March 9, 2017

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 a litre.

*Diesel fuel to drop by 7/10ths of a cent, and...

*Gasoline to drop by 1.6 cents a litre.

Market highlights

API reports another huge crude inventory build

The American Petroleum Institute recorded yet another huge inventory build, with crude oil stocks growing another 11.6 million barrels to the domestic stockpile.

     Gasoline inventories were reported down in excess of five million barrels, while distillate stocks were also down by 2.9 million barrels.

      All eyes will be on the US Energy Information Administration’s report due to be released around noon Newfoundland time.

OPEC meeting in May

While it’s a long way away yet, it could be the key date that signifies whether OPEC’s member states will carry forth with production cuts, or whether they will answer to the massive growth in U.S domestic production. The US Energy Information Administration is already predicting that US domestic will hit 9.7 million by the end of fiscal 2018. The US has already added half of the total cuts made by OPEC since the end of November and could set itself up to meeting the 1.2 million gain in domestic production within the next four months if oil stays close to $55 US a barrel.

     Question to be answered in May then? Will US domestic production spark OPEC members into opening the floodgates to knock US production again, or does OPEC answer with more cuts?

      For now, it’s “wait and see”.

     That’s it from me this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, March 2, 2017

Hi to all,

Here's what I have for this week's price changes. Keep in mind winter blending that may throw off the numbers a little.

*Heating/stove oils show an added 7/10ths of a cent a litre....
*Diesel shows an increase of a penny a litre, and...
*Gasoline shows an increase of 8/10ths of a cent a litre.

Market highlights

US rig count continues upwards
      With the cuts instituted by OPEC and non-OPEC producers at the end of November 2016, along with it came the promise of small shale producers in the US and elsewhere getting back into the market.
      And get back they did, and at such a pace that OPEC countries may have to re-think cuts they made, either cutting deeper or starting another oil price war to finally knock down the competition.
      Last week, numbers for rigs getting back to work increased again, this time by five, while US domestic oil production hit 9 million barrels, an added 600,000 barrels of crude a day since the first week of October.
      Rigs increased by 145 additional units in the field since that same October.

Gasoline finally shows a draw
      US inventories of gasoline showed a modest drop in inventories last week with refiner capacity hitting a record low for the year of 84.4% of total US production.
      While refineries may be down for summer maintenance to refine more gasoline at the end of winter, it remains to be seen where gasoline prices could head when capacity picks up. Even though demand has remained below seasonal levels as compared to other years, if capacity picks up in the next couple of weeks before present inventories are drawn down, then we have the set-up for lower prices at the pumps.
      No demand means lower prices in the hope that consumption picks up.
      It's a ticklish situation refiners and Big Oil finds itself in.

That's it for this week!

Regards,
George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, February 23, 2017

Hi to all,

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

*Heating and stove oils show a drop of 2/10ths of a cent a litre.

*Diesel fuel shows a drop of 4/10ths of a cent, and...

*Gasoline shows a drop of 1.8 cents a litre.

Market highlights

Forget a collapse in oil. How about a collapse in gasoline?

   It may sound funny immediately before the spring run-up in gasoline prices that happens starting this time of the year, but data from the US Energy Information Administration seems to be pointing the way towards an extended drop in gasoline-that is, if demand doesn’t pick up soon.

   Data from the EIA indicates that US gasoline inventories are at their highest since the EIA first started recording gasoline inventory data back in 1990.

    Secondly, while gasoline production hangs around 9.5 to 10 million barrels a day, and with refinery capacity down to 85% due to refinery maintenance, even a drop in capacity to 9.3 million barrels a day still shows a build in inventories. Demand for January hung around 8.2 million barrels a day, itself a strange anomaly in a usually busy US economy, blowing up inventories in the US northeast to record levels.

     So, with those factors, with refineries shortly coming back into production, if demand doesn’t pick up in the interim to swallow up bulging inventories, then prices can’t be expected to climb appreciably heading into late spring and early summer.

     Inventory data is going to be the focus the next few weeks.

US rig count climbs again

     While US domestic production remained steady last week hovering close to 8.977 million barrels a day, the US rig count climbed again last week as more small producers got back into the markets. The rig count showed that another ten rigs went back to work last week with oil holding steady and OPEC compliance registering close to 90%.

     That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, February 16, 2017

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that heating oil as well as Diesel numbers may be off slightly due to winter blending.

*Heating and stove oils show a drop of 3/10ths of a cent a litre.

*Diesel shows an increase of 2/10ths of a cent a litre, and...

*Gasoline shows an increase of 1.6 cents a litre.

Market highlights

API reports another huge inventory build

     While some may have been expecting a drop in gasoline and oil prices this week, it was left to the imagination as to why prices didn’t fall with a huge inventory build last week.

     However, the American Petroleum Institute is again reporting a huge build in inventories ahead of the US Energy Information Administration’s report due tomorrow at noon, this time by 9.98 million barrels.

      Last week, in digging down through the evidence, it was found that while there was indeed an inventory build, it was mainly caused by the movement of oil in storage in the Houston shipping channel with that oil coming ashore, as well as a build in imports in the US northeast that caused the issues.

      Sad to say, I fear the markets are running out of excuses for the inevitable fall in oil that will occur with such inventories building as they are. Oil right now is on borrowed time, artificially held up with market excuses like “ a perceived” increase in demand.

      Demand may seem to be up when we see a draw-down in inventories of gasoline, but it’s a hard fact to stick by when you see capacity dropping at such a rate that itself affects inventories. Gasoline inventories from the industry-led group are also up. What will be the excuse next week?

      It’s kind of like buying a used car and not having the down payment. You don’t’ have to have a cent in your pockets, but the papers can be worked so you have it on paper to make the purchase. You still know you’re going to have to pay for it in the end.

      The oil markets may have to get ready for the shock.

US rig count up yet again

     While US domestic production creeps closer to nine million barrels a day, the US rig count is up yet again this week according to Baker-Hughes, this time up by another 12 rigs.

     US domestic oil production should hit the “magical”9 million barrel a day mark either later this week, or next week, that should have OPEC taking a keener eye as they lose a little more market share from US exports.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, February 9, 2017

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that winter blending may throw off the Heating/stove and Diesel numbers from the actual that may occur:

*Heating and stove oils show an increase of 9/10ths of a cent a litre.

*Diesel shows an increase of 1.1 cents a litre, and...

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

Market highlights

US shale having an impact

    Recent inventory reports seem to confirm what was predicted months ago, that the US shale and tight oil industries would be quick to respond to any cuts implemented by OPEC and some non-OPEC producing countries. With growing inventories, particularly the last three weeks, oil prices have seen more downwards pressure as inventories have continued to grow.

    Pressure is also coming off gasoline as demand has tailed off, leaving gasoline inventories with growth twice as much as what was expected.

    US rig counts also continue to climb as investors of small-time producers have entered back into the markets to fill the gap left by the November cuts.

API report shows a massive build in inventories

     The American Petroleum Institute, an industry related group released their weekly inventory report which should be quite alarming, if you’re an OPEC member.

     The group’s report showed a massive crude inventory increase of 14 million barrels this evening which should impact prices in electronic trading before the market open.

     Gasoline inventories also showed an increase of 2.9 million barrels, well more than double market expectations, that should impact spot prices for gasoline over the next week.

     A clearer picture of what is happening out there will be drawn from the US Energy Information Administration’s own inventory report which will be released around 12 noon NST.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, February 2, 2017

Good evening to all,

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

*Heating and stove oils show a drop of 1.1 cents a litre.

*Diesel shows a drop of 9/10ths of a cent a litre, and...

*Gasoline shows a drop of 2.4 cents a litre.

Market highlights

US/Canadian oil continues to rebound

     As I predicted would happen some months back, the US oil industry continues to rebound to fill the gap left wide open by OPEC and non-OPEC production cuts.

     Again this week, US rigs have continued their return to the field with the addition of another 15 rigs back into production and exploration.

     Sources in Alberta also continue to show a good rebound starting within the oil industry there, especially moreso with the stability that oil has shown in recent weeks.

Inventories continue up for oil and gasoline

     Last week’s inventory report from the Energy Information Administration continues to show good builds in gasoline inventories, one of the chief reasons why gasoline prices will see their fourth drop in a row since their peak during Christmas/New Year’s travel demand.

     With refiner capacity again showing retreat, Gasoline inventories climbed by another 6.8 million barrels. That figure is pretty important when you consider the fact that refiners were throttling back on production.

That’s it for this week.

Regards to all.

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, January 26, 2017

Hi folks!

Better later than never, but here's what I have for this Thursday's price changes. Keep in mind that winter blending will throw off the Diesel and heating/stove oil numbers somewhat:

*Heating/stove oils show a drop of 4/10ths of a cent a litre....
*Diesel shows a drop of a cent a litre, and...
*Gasoline shows a drop of 1.8 cents a litre.

Market highlights

US inventories increase
      Last week's inventory read from the US Energy Information Administration saw a 2.3 million barrel increase in crude oil, but the real news to hit the markets was written in the gasoline inventory numbers.
      Gasoline inventories reported a growth of six million barrels last week, much higher than expected, but not a real surprise as it comes at the end of the Christmas travel season.
      What was evident in the report was a noticeable drop in the refiner capacity numbers which saw a three percentage point drop to just shy of 91 percent.
      While refineries throttled back, gasoline increased in inventory.
      The markets immediately responded with a drop that stayed relatively steady through the week to what we have for Thursday.

US rig count shows a sharp increase
      The weekly US drill rig count showed a huge increase last week that proves a lot of smaller producers are getting back in the game.
      The US rig count showed its' largest weekly increase since April, 2013 with the rig count jumping by 26 additional rigs in the field.
      Look for Western Canada to start getting busy again as production costs are slightly lower due to the dollar difference with the U.S.

      I'll leave it at that for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, January 19, 2017

Hi to all,

Here's what I have for this week's price changes. Keep in mind my margin for error of 3/10ths of a cent when you look at that heating/stove number!

*Heating and stove oil shows an added 2/10ths of a cent a litre.
*Diesel fuel shows a drop of a penny a litre, and...
*Gasoline shows a drop of 1.1 cents a litre.

Highlights

Majors moving to land
      In what is probably a sign of the times, large oil companies are beginning to make a move to shore where lower expenses to get into the oil game show more promise.
      A good example of this is a new acquisition of drilling rights by Exxon/Mobil who, with a few billion dollars more, have made a major expansion into the Permian basin in New Mexico.
Estimates are already in showing an estimated 3.4 billion barrels of reserves in the acquired property.

International Energy Agency and a possible flood of oil
       It took them long enough...
      The International Energy Agency is looking at a huge increase in US oil exports to begin just in the next few months that could be the spark to start another oil war for market share with OPEC.
      Because oil prices have hit a level where some profits can be made, the IEA is predicting that US domestic production will be quick in to fill the gap left by OPEC production cuts.

    Look for oil prices to stay "loopy" for the next little while in what could be the lead-up to another price war!

That's it for this week!

Regards,

George
Twitter @GeorgeMurphyOil

Price changes for Thursday, January 12, 2017

Hi to all,

Here’s what I have for this week’s price changes, keeping in mind winter blending which may throw off the distillate numbers somewhat.

*Heating and stove oils show a drop of two cents a litre.

*Diesel fuel shows a drop of 2.7 cents a litre, and...

*Gasoline shows a drop of 3.2 cents a litre.

Media release

Conception Bay South, NL, January 10,2017- “It may be the start of a decline in prices that, if market sentiment sticks around, could lead to steeper drops in price in the next few weeks.“ That’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“Speculators for the last six weeks have played up oil prices with the fact that OPEC has stepped in and made substantial cuts to production, but the fact that they left a gaping hole for other producers to step into, may very well be coming back to bite them. As predicted would happen, smaller US domestic producers seem to be coming back into the market, and that is beginning to show in the U.S rig count and worldwide.

“It’s not just from the U.S that I am seeing a quick return to the markets. Worldwide, the rotary rig count increased last week by another 94 rigs, sparked by restarts in Canada and other centres where shale resources were previously being explored. World-wide, that amounts to 1772 rigs operating, with last week’s return of 94 rigs, the highest increase week-on-week that I have seen.

“Doubts about the ability of oil to maintain present pricing levels are permeating the markets, at least for the time-being, and that’s the basis for some relief for consumers this week. OPEC member compliance is also an important factor with both Libya and Iraq exports beginning to climb.

“The Canadian dollar also is a factor this week, rising in value against the U.S greenback in the face of falling oil-at least for the time-being. The Canuck Buck has gained almost three cents in the last two weeks as a result of a mostly positive Canadian jobs report last week. A rising Canadian dollar against the U.S greenback has the tendency to drop prices further.”

                                                                                                        -30-

For more information, contact:

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, January 5, 2017

Hi to all,

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

*Heating and stove oils show an added 1.4 cents a litre up.

*Diesel shows an added penny upwards, and...
*Gasoline shows an added 1.2 cents a litre at the pumps.

Highlights

US EIA inventory data still shows demand for gasoline

     US Energy Information data still showed demand for gasoline to remain up in the lead-up to the Christmas travel season, but this week began to taper somewhat. It may be as simple as investors not seeing demand continue in the weeks after the holidays and that may be the beginning of what hopefully will be a retreat in prices. Any building of inventories during winter on gasoline may be enough to lower prices in the coming weeks.

     The US EIA reported a drop of 1.6 million barrels. Inventories remain a rough 5 million barrels over the same timeframe last year.

Local word

     With snow-clearing becoming a prevalent issue on people’s minds, it remains a wonder why government has not taken some of the new gas tax money and re-invested back into 24 hour snow-clearing.

     Last year, government collected $193.98 million in gasoline taxes and it’s own estimates predict $312 million will be collected with the doubling down of the gas tax in year one.

     Government also said they would save a mere $1.9 million in getting rid of 24 hour snow-clearing.

     “As a matter of public safety first and foremost, why can’t government take the $1.9 million from the new gas tax money and retain proper snow-clearing for the people of the province? It’s obvious right now that their new program is not working, plain and simple”. That’s according to George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

      “Government must understand also that our highways are part of how we carry out commerce in this province, and if they aren’t useable, then we don’t generate needed revenue for business, and also for government.

       Basic services suffer.

        Not cleaning roads may in fact cost government more than just savings. It could cost jobs, let alone lives!”

Letter to the Public Utilities Board: Transportation study needed for Labrador market

     I will be writing the Public Utilities Board in the next couple of days to ask that the Board review transportation costs of fuel, particularly to coastal Labrador.

     The reason is simple really...

     Before Christmas we all saw that Coastal Shipping, a branch of the Woodward Group lay off a hundred Newfoundland and Labrador personnel in favour of cheaper labour aboard five of their ships.

    “If labour is a major cost to them of doing business that has been claimed as an allowable expense in the transport of fuels and mark-ups to consumers as a result, then prices for the transport of fuels to Newfoundland ports of call, but  particularly to coastal Labrador must come down as a result of paying out lower wages. Just because you fly a ‘flag of convenience’ does not mean consumers should pay. If tanker costs are coming down for the company, fuel costs have to come down for the consumer.”

That’s it for this first year’s edition!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, December 29, 2016

Hi to all,

Here's what I have for this week's price changes.

Keep in mind that this week's numbers may be off somewhat as a result of today's missing data. I had to take my "best guess" on spot prices today just based on oil price closure. Six days of this week's data is good however, so the numbers are probably not that far off from the actual that may occur.

*Heating and stove oils show an increase of 2.3 cents a litre.
*Diesel shows an increase of 1.8 cents, and...
*Gasoline shows an added 3.2 cents a litre this week.

Market highlights

Watching and waiting
     While trading in oil was lacklustre over the last week due to Christmas holidays, some data is starting to emerge from the tail end of OPEC and non-OPEC cuts due to be implemented in January. Already, some drillers are back in the field and the latest rig count seems to confirm in no uncertain terms, that they're headed back to take advantage of a hole left in the production of oil.
      I think OPEC has forgotten that just a year and half ago, approval was sought and granted, to oil producers in the US to step up exports if the time and market conditions were ever to allow.
      They did, once the shale boom hit and oil prices remained over $100 US a  barrel.
      This week saw another gain the US rotary rig count with the shale industry adding another 13 rigs to working inventory.
       I'm waiting on further data from the US Energy Information Administration on Thursday that will most likely see another increase in US domestic production, which last week, saw production hit 8.797 million barrels a day.

OPEC production data
      The latest data on total OPEC production on the heels of self-imposed cuts should be available sometime during the first week of January.
       What is also going to be more interesting to watch is to see how much both non-OPEC producers who signed on to cuts and non-OPEC producers out there altogether, are doing to either reign in on production, or actually beginning to produce more to meet the "shortfall" created by OPEC cuts to production.
        You have to keep in mind here the simple fact of capitalism in all this equation: a company is supposed to make money for its shareholders and those companies can't do that, or attract investors, with a plan that doesn't show growth. That's going to be an important "motivator" in all this.

       Let's see who comes out on top...

Regards,

George
Twitter @GeorgeMurphyOil
     
    

Price changes for Thursday, December 22,2016

Hi to all,

Here’s what I have for price changes for Thursday, December 22,2016.

*Heating and stove oils show an increase of 1.2 cents a litre.

*Diesel fuel shows an increase of 1.6 cents a litre, and

*Gasoline shows an increase of 2.8 cents a litre.

Market highlights

US rotary rig count increases

     US drillers are heading back to the oilfields, and OPEC should be worried...

     While US drilling numbers increasing at a steady pace, this week increasing by another 12 rigs from last week’s increase of 26, others are simply waiting to get “back in” after they get a sense of market and oil price stability. OPEC should show some sense of worry, knowing that there was going to be a measured response against cuts.

US domestic oil output shows a sharp spike upwards

      US domestic oil output also showed a marked response on the heels of last week’s announced cuts. As predicted would happen, US domestic production increased by another 99,000 barrels a day just in the first five days after the announced cuts and the Saturday agreement between OPEC and non-OPEC producers.

      One would easily interpret that increase with an immediate impact on prices. While not an extremely large increase, it’s still early in the going. Expect to see more players to enter the market with oil up a rough $2 US on the week.

       The most likely reason for the spike in output was the simple fact that fields which had initially been shut down as a result of the June ’15 price collapse. With oil production hitting 9.6 million barrels that month, US domestic has just hit 8.797 million barrels a day since in comparison.

        But OPEC should be aware that there a re a lot of closed off spigots that can be turned on real quick if oil gets much higher.

         That’s it for this week, with all this coming from me with a “Merry Christmas” along with the “warmest” of holiday wishes!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, December 15, 2016

Hi to all,

Here's what I have for this week's price changes, keeping in mind that the winter blending may throw off Diesel and Heating/stove oils a little from the actual that may occur.

*Heating and stove oils show a drop of just 6/10ths of a cent/Litre....
*Diesel shows a drop of a penny, and...
*Gasoline shows a drop of 1.8 cents at the pumps.

Market highlights

US rig count shows an increase
     On the heels of OPEC and non-OPEC countries getting together in Vienna, Austria last week for their production cut meetings, those who joined in cuts should not be surprised to fins a very responsive US domestic oil industry begin to kick things into high gear.
     The US rig count, as I suspected, increased by double digits last week, with the US drilling industry adding 27 new rigs piercing grounds for oil.
     As the numbers suggest, that raises the stakes in a game of competition between US domestic production and it's ability to try and fill a gap in almost 1.8 million barrels in cuts by both OPEC and non-OPEC producers last week.
     Numbers on exactly how much oil will be added to US domestic production will probably keep increasing to a point that it could negate OPEC cuts.
     After all, it's not just the US that they have to worry about now.
Other countries left to the sidelines with the initial fall in oil, will also be quick to respond. Equador was another country left at a high water mark before prices fell, so it should be widely expected that others will respond in kind to a hole left in the markets for product.

I'll leave it at that for this week!

Regards,

George
Twitter @GeorgeMurphyOil

Price changes for Thursday, December 8th, 2016... and OPEC commentary!

Hi to all,

Here's what I have for price changes now that the final numbers are in. As I thought, there was not much change from lasts evening's post.

*Heating and stove oils still show an increase of 4.5 cents a litre.
*Diesel fuel shows an increase of 4.9 cents a litre at the pumps, and...
*Gasoline shows an increase of 5.5 cents a litre coming this Thursday morning.

Market highlights

OPEC makes a deal
*In spite of the odds, OPEC members have signed a deal that cuts production between its members by a whole 1.2 million barrels, but as the news says today with oil, a lot of people still have their doubts and await proof that the deal will hold.
      While members of OPEC have signed on, the real proof will come with "compliance"- a vitally important factor in ensuring that OPEC itself still has the influence in the oil market that I still believe it has lost.
      Even though the deal has been delivered, latest figures from OPEC indicate that November month is one of the heaviest months that OPEC has produced oil, and all in spite of meeting over an agreed to cut. OPEC produced nearly 34.2 million barrels a day compared to 33.8 million barrels a day in October.
      Meanwhile, non-OPEC oil producing nations like Russia, will meet with OPEC tomorrow to discuss an arrangement to cut production as well. Russia produced 11.2 million barrels a day last month, the highest in thirty years.

Will oil hold? I don't think so...
*While OPEC members remain hopeful that prices will increase like they have, already sentiments against OPEC members not cheating are beginning to permeate the market with doubt. With a history of OPEC members cheating on their own quotas, and rivalries between Iraq, Iran and Saudi Arabia abounding, there is rank suspicion between members as well as an underlying distrust. Saudi Arabia and Iran face off against each other over a civil war in Yemen, while Iraq and Iran have ideological differences that stretch generations.
      Pare with that the idea that others await on the sidelines to step in where others have backed out, leaving some with "breathing space" and a chance to recover. OPEC had shale producers on the ropes, coming within a hair of knocking the US oil industry back to the 1990's where OPEC first went all out in flooding the oil markets, stripping the US of just about all of its market-share. Now frackers have been given the time to adjust, control costs and lower them in a lot of cases.
      The shalers will step in and US domestic response will be strong and pick up the loose ends. Other non-OPEC producers will smell an opportunity to recover lost share and will also respond. It will be hard for the Russians not to respond in kind.
      What has forced OPEC to flinch first will get them in the end. OPEC blinked when it became readily apparent that they themselves have gotten too used to the revenues garnered from oil resources. That's a lesson that everyone has failed to notice yet: in spite of OPEC oil producers being completely different in one context, they're really no different than any other corporation who has long tried to corner a market...then failed.

Call this a "commentary" this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, December 1, 2016

Hello!,

Here's what I have for this week's price changes.

Keep in mind that these numbers this time around for gasoline may be off a little from the actual the PUB may set, considering they picked up more volatility than my numbers did last week!

*Heating and stove oils show an increase of just 2/10ths of a cent a litre.
*Diesel shows an increase of 7/10ths and...
*Gasoline shows an added 1.5 cents a litre at the pumps.

*Don't be surprised if you see the PUB back down from last week's numbers. While I show an increase, it may be part of the volatility I missed out on LAST WEEK'S price change.

Market highlights

OPEC deal in doubt...Again
Russia remains non-committal in a production cut, while OPEC members Iraq and Iran are still holding their cards to their chests. Both Iran and Iraq want to reach their production limits before they institute any cut or freeze to production, while OPEC members Nigeria and Libya also want to be left out of any production cut the group may come up with at tomorrow's meeting.
      Interesting to watch, but oil has shown some pretty heavy volatility while OPEC itself tries to hammer out any deal.
     Also entering into market thinking is the possibility that US domestic production has shown some resiliency and may be quick to respond to "market needs" should a cut from OPEC come into play.

I'm going to leave it at that for now.

More tomorrow when the OPEC meeting breaks away.

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, November 24th, 2016

Hi to all,

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

*Heating and stove oil show an increase of 2.0 cents per litre for Thursday....
*Diesel shows an added 2.6 cents a litre, and...
*Gasoline shows an increase of a penny a litre.

Market highlights

OPEC keeps talking
      OPEC members are seemingly coming close to an agreed set of cuts to production and that seems to have spurred prices for oil upwards over the last few days. But what I'm watching for is OPEC member compliance with a round of cuts that still makes me not believe that they ever will take hold and help support the price of oil.
      Consensus I am hearing is OPEC leaning toward a possible four to five percent cut in overall output that will bring OPEC total daily production down a rough 1.5 million barrels a day.
      If anything, oil prices may be supported for a very short timeframe, and that's when I believe two things will happen: US domestic production will kick in, and OPEC members will take advantage and cheat on those self-imposed cuts.
      Rumours in the markets have OPEC allowing fellow members Iraq and Iran to produce at present output and not cut production in order to have them sign on to a cuts agreement. The deal set to be signed at the next meeting of OPEC November 25th will be a "make or break" deal for the organisation and may be the hedge-point by which OPEC stands or falls.

I'll leave it at that for this week, but I'll be watching the oil news with much interest this weekend!

I'll keep you all up to date.

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, November 17, 2016

Hi to all,

Here are the final numbers for this week's price changes:

*Heating and stove oil to drop by 9/10ths of a cent a litre....
*Diesel fuel to drop by 1.1 cents a litre, and...
*Gasoline to drop by 4.3 cents a litre.

Market highlights

OPEC swings the market

There's no doubt that while OPEC is losing some market influence, there's no doubt who carries the influence within the group itself.
     After a wild downward swing in oil yesterday, Saudi Arabia warned its fellow OPEC members that if they all didn't comply with a scheduled cut in production, it would again flood the markets with cheap oil by opening their own spigots, raising their own production levels to hit over eleven million barrels a day.
     With that threat, OPEC members are believed to be starting to fall in line with the idea of cuts to production and then the speculators moved in, pumping up oil prices today by over $2 US a barrel.
     Refined product prices also responded, moving upwards at the end of the day, but still not enough to stop predicted decreases to consumer prices here in Newfoundland and Labrador.
     Meetings between technical staff from member OPEC nations moved up their November 25th meetings to November 21st in response to the Saudi threat. That's nine days out from OPEC's regular meeting on cuts due to happen November 30th.

US domestic production continues to rise
For the fifth week in a row, US domestic production has increased again, this time by another 240,000 barrels a day in response to rising prices.
     Latest data seems to confirm that the shale industry has indeed started to get some measure of control over costs and have responded to the sensitivities of prices around $45 US in order to break even.
     Also to note here is what appears to me to be a sharp increase in a very short time. If OPEC cuts, look to the shale industry south of the border to respond in short order as well.

I'll leave it at that for this week...

Regards and pass the word on the numbers!

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, November 10, 2016

Hi to all,

Here's what I have for this week's price changes, now that all the data is in...

A reminder: My heating, stove oil and Diesel numbers may be off somewhat due to winter blending! Use them as an indicator as to the direction these fuels could go, and not the actual that may occur.

                                                                                 ...

*Heating and stove oils show a drop of 4.3 cents a litre.
*Diesel shows a drop of 4.0 cents a litre, and...
*Gasoline shows a drop of 1.4 cents a litre.

Highlights

Colonial pipeline back online
Late Sunday saw the return of operation of the Colonial pipeline that resulted in a short-lived spike in gasoline prices on the New York Mercantile Exchange on Tuesday/Wednesday of last week. As soon as word was received that the disruption would not last that long, and that operations of the pipeline would re-start, spots ended up in a headlong retreat after rising close to four cents a litre in trading.
      Spot prices for gasoline have since returned to "pre-disruption" levels.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, November 3, 2016

Hi to all,

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

*Heating and stove oils to drop by 8/10ths of a cent per litre.

*Diesel to drop by an even penny, and...

*Gasoline shows a drop of just 6/10ths of a cent.

Market highlights

Another closure of the Columbian pipeline disrupts gasoline output

An explosion and fire has again closed the Colonial pipeline that runs from the US Gulf of Mexico refining and export areas to the US northeast, causing a sharp increase in gasoline spot prices on the New York mercantile exchange today that may not be felt by Newfoundland and Labrador consumers until they hit the pumps next week IF the line isn’t repaired soon.

    Before today, numbers showed a small decrease of a penny a litre, but the fire and explosion that took one life has resulted in a sharp increase in gasoline prices as a result of a “supply disruption”.

    “We’ll see how it goes in the markets over the next couple of days, but prices are already showing close to a four cent a litre increase could happen if today’s closing prices carry through the week”.

      Repairs are estimated to take until Saturday at the earliest to bring the line back into full operation again.

OPEC deal could fall apart?

OPEC’s deal to make a cut to production may already be under threat as Iran and now Iraq, are expressing dissatisfaction with having to institute cuts before they reach maximum “pre-war” production levels.

      That played into the markets this week allowing Brent prices to drop almost $3 US a barrel to close today at $47 and change.

       Speculators are also keeping in mind that the Saudi government is looking at raising cash through the sale of stock in the government owned Saudi Aramco oil company, saying the only reason why the Saudi’s wanted a freeze was to raise the share price and increase the government take.

       In the meantime, OPEC meets again at the end of this month to formally implement the limited production agreement.

       Food for thought...

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, October 27, 2016

 

Hi to all,

Here's what I have for this week's price changes:
*Heating and stove oils to increase by 8/10ths of a cent a litre....
*Diesel fuel to increase by 1.1 cents a litre, and...
*Gasoline to increase by 1.2 cents a litre.

Market highlights
OPEC deal falling apart?

Already, there are internal rumblings from within OPEC on how members themselves will be able to keep any production cuts in place.
      OPEC member nation, Iran has been speaking out lately on the prospects of continuing to produce to maintain and increase lost market share from sanctions placed on the country back in 2008. While "joining" with members in signing on to cuts, they don't want to institute any cuts until they reach their previous 4.7 million barrel a day output. They still have a long way to go there yet, but I'm guessing that they're still about 900K barrels off the mark.

Canadian dollar tags consumers
The drop in the Canadian dollar this week connected to lower than expected economic growth, has hit consumers this week with the Loonie losing ground against its southern cousin, the US greenback.
     The Canadian dollar has lost nearly two cents against the US marker in the last three business days, costing consumers ironically 1.2 cents since last Wednesday's measure.

Bennett fiscal update this week has to "give back"...
Remember the provincial budget?
      That was the document that led to a massive increase in provincial road taxes that has cost consumers and businesses alike with lost spending power and lost disposable income to spend.
      It also increased the HST provincial take and increased your fuel prices a rough twenty cents a litre for every litre you bought.
      It was, in essence, the province's own carbon tax...
      But it's time to drop the tax back and even up the playing field again in Atlantic Canada with the latest increase in oil that has added close to $190 million into provincial coffers by the time the next budget rolls around.
     Why drop it back?
     Simple really...
     The price of oil has increased to almost $1 US over what was projected in the budget, successfully adding an estimated $295 million into provincial coffers when the next budget comes down.
     We have paid our fair share and it's time to cut the taxpayers, and business alike, a fair shake.

That's it for this week!

George Murphy
Twitter @GeorgeMurphyOil

Oil prices to rise?...Don't bet on it!

OPEC is happy...For now.

But I really don't know why they should be.

For the first time since 2008, OPEC cut production.

While the meetings in Algiers finished up yesterday with a lacklustre arrangement for fellow OPEC members to institute a "long needed" cut to production, what will it mean to the oil markets?

In an unstable world still ever dependent on oil, people can be quick to forget why oil prices have stayed low for so long, and why OPEC is hoping beyond hope that their fellow members will be happy with instituting a million barrel a day cut.

Not all OPEC members are happy with cutting.

Two OPEC member countries, namely Libya and Nigeria have to be upset with a quota that has them wondering why they have to put up with part of this million barrel a day cut in the first place. Both countries are trying to recover from instability and revolution and the last thing they possibly need is a cut to production that would hinder any recovery to their torn economies.

Nigeria, previous producers of almost 2.7 million barrels of light, sweet oil per day, is being asked to shoulder cuts while still recovering from a low output of close to 1.5 million barrels.

Libya, producers of almost 1.5 million barrels a day prior to their post-Ghadafi revolution, have only managed to scrape up a 300,000 barrels a day output and are hoping to return to full operation in the coming months.

This not the only sign that things may not go well on the oil front...

In recent months, in spite of lower oil prices, the US domestic oil industry has shown itself to be resilient in the face of low oil prices. A quick look at the numbers of rigs returning to the field is a sure sign that, if oil prices do indeed rise, their return to the fracking fields in the US Eagle Ford, Marcellus and Bakken fields are a sure bet.

Don't count out the response of US domestic response to fill in the role of a hole created by an OPEC "knee-jerk" response to lower oil prices.

Keep in mind also that any OPEC-instituted cut in production has never worked when it comes to the final read on output. OPEC has a history of over-producing and under-reporting oil production figures, so there's no reason to expect them to change dirty habits.

The markets should know this...

They're just not saying so yet...

Finally...

Gone are the halcyon days when OPEC used to institute a cut and the markets saw a meteoric rise in oil. Most times saw sharp, sudden increases to oil that were sustained and helped support oil to where it hit record heights.

That was before the days of the frack and the advent of "democratic oil". Now everyone has it, if they have a shale resource and everyone can respond to fill that oil hole.

OPEC knows this, but they forgot this very important fact.

OPEC did succeed in two things yesterday: OPEC managed to put out the sure signs that they lost the fight for market share and the fight to retain control of the price of oil.

Investor beware!

Regards,

George
Twitter @GeorgeMurphyOil

Price changes for Thursday, September 22, 2016

Here's what I have for this Thursday's price changes:

*Heating and stove oil to drop by a half penny....
*Diesel fuel to drop by 6/10ths of a cent, and...
*Gasoline to increase by 2.7 cents a litre.

Market highlights

Pressure on refined gasoline
A break in the important Colonial pipeline that brings gasoline from the US southeast refining area to the US Mideast regions has been causing spikes in prices in most regions east of the Mississippi and Ontario and east as well.
     Because of the supply disruption, prices for gasoline also showed a marked increase as shortages in the US southeast for refined gasoline increased the value of gasoline from other regions unaffected by the supply disruption.
     It's not going to last however, as prices are already starting to moderate as a pipeline fix-a temporary one at least- is due to come into operation at almost any minute that should bring supplies back online.
     Look for prices to retreat again next week on the news.

Oil producers to meet next week
Mark down September 28th as a day to watch oil on your calendar as Saudi Arabia and other OPEC and non-OPEC producers meet to discuss any possibility of invoking a freeze on further oil production meant to stabilize and increase oil prices.
     Already, the president of Algeria is stating that they need to see at least a million barrel cut in present production in order to help stop the latest fall in prices.

I'll keep it at that this week

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, September 15, 2016

Good evening,

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

*Heating oil shows an increase of 1.5 cents a litre....
*Diesel fuel shows an increase of 1.2 cents a litre, and...
*Gasoline shows an added 2.4 cents a litre.

Market highlights

US Inventory report impacts prices
Last Wednesday's US EIA inventory report certainly was a model for how speculators can jump all over the tiniest of facts.
      The inventory report from last week gave everyone a good read on how much the markets can be influenced once some "certainty" is weighed against the truth.
      Last Tuesday, the last day of the regulatory session, industry reports were released to the markets stating that US inventories were impacted according to the industry report, in a negative way. Numbers for oil were well down. But the markets the next morning didn't exactly run away out of control on their news.
      Enter Wednesday noon when the US EIA inventory read came out for the week before.
      Facts are facts, and in the face of a drop in both gasoline and crude oil inventories, oil shot up a good $2 plus over the next few hours and stayed there for the rest of the day.
      Refined commodity prices also showed a rapid increase right behind oil.
      But expect a retreat in prices starting into this week's market trading that should impact consumer prices set for next Wednesday.
     While Hurricane Hermine shut down most imports into the Gulf of Mexico last week that turned oil prices up, then the opposite will be true for tomorrow's report. That one should show a massive build in inventories, those same barrels that didn't make it to shore the previous week that put the screws to prices for us this week.
     The numbers may be up this week, but they're not likely to last as the reality of an over-supplkied world full of oil once again takes hold of the oil markets.
     The numbers may be up this week, but they're not likely to last as the reality of an over-supplied world full of oil once again takes hold of the oil markets.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, September 8, 2016

Hi to all,

Looks like the retreat in prices I predicted a couple of weeks back is starting to kick in. Here's what I have for this week's price changes:

*Heating and stove oil shows a drop of 3.2 cents a litre....
*Diesel fuel shows a drop of 3.5 cents a litre, and...
*Gasoline shows a drop of 4.1 cents a litre.

Market highlights

Saudi's meet with Russia on freeze prospects
Saudi Arabia, OPEC's largest producer of oil, met in a separate meeting this week with non-OPEC producer, Russia on the prospects of instituting any freeze in oil production.
     While the markets are spotty on any support of a freeze, it seems that any freeze in production will end up on the floor as the sceptics don't see either country, or OPEC, to stick with self-imposed limits.
     Oil prices struggled to gain any ground this week on the news.

US inventory data tells a story
Last week's inventory data out of the US Energy Information Administration has some things of note this week.
     First off, but not too unexpected, was the fact that oil showed a gain in inventories that helped start a drop in prices. Inventories of oil were up 2.3 million barrels. Part of that build may very well have been helped by additional supplies from Alberta and Nigeria, most recently back in the markets from their supply disruptions.
     Secondly, distillate inventories were up again well ahead of the fall and winter season. All good to see ahead of consumption time.
While refinery capacity was also down, reflective of the changing demand season for gasoline and distillates, I have seen a retreat in gasoline simply as the result of a drop in gasoline demand at the end of the summer driving season.
     Look for the focus of the markets to switch to attention towards the distillate markets from now until spring 2017.

That's your report this week!

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, September 1, 2016

Hi to all,

Here's what I have for this week's price changes. I'll apologize in advance for the lack of any market news. There simply wasn't any time for market analysis this week.

*Heating and stove oils will increase by 3/10ths of a cent a litre.
*Diesel prices to drop by 1/10th of a cent, and...
*Gasoline prices to increase by 8/10ths of a cent.

Regards,

George
Twitter @GeorgeMurphyOil

Price changes for Thursday, August 25, 2016

Hi to all,

As predicted, there's not much change in the numbers.

All are up.

Here's what I have for this week's price changes:
...

*Heating and stove oils to increase by 3.9 cents a litre.
*Diesel fuel to increase by 3.8 cents a litre, and...
*Gasoline shows an added 4.8 cents a litre at the pumps.

Market highlights

Iran to join talks in Algeria
*In a surprise to the markets today, Iran is said to have written a letter to fellow OPEC members letting them know that they will join talks with other OPEC and non-OPEC members in the possibility of instituting a production freeze.
     World oil producers are still trying to deal with an excess of supply in the markets, and it is widely believed that a freeze in worldwide oil production will help alleviate the present drop in prices.
The news today help take oil prices out of negative territory and oil ended with a gain on the day.

Oil inventories lower
Last week's inventory news out of the US was for some a surprise as buth oil and gas supplies took a dip last week all against market expectations.
    Gasoline inventories took a drop of 2.7 million barrels in last week's report with oil also down by 2.6 million barrels.

I'll leave it at that for this week.

Regards to all,

George Murphy
Twitter @GeorgeMurphyOil

That was the release I sent out a little while ago...

The news out of Iran today was a little surprising, I will admit.

In case you missed it, the Iranians are now talking about attending the "freeze" meeting set for Algeria in late September...

Curious though is the effect of making an announcement like that today a full month ahead of the scheduled meeting. Perhaps the Iranians now know what kind of influence the now hold in the markets, but even more curious knowing that they have been taking on the Saudi's at their own game with discounting to their favorite Asian customers almost a side-act.

Be that as it may, Iraq still enters a new realm in the markets with their announcement the other day that they have reached an export deal with the Kurds in the north where exports have been shut in from the Kirkuk fields. With oil down yesterday on the immediate addition of upwards of 200,000 barrels a day in output, it was no surprise to see Iran respond with their own "influence" shot to gain back some attention again.

But keep looking south, but not just south...

With rising oil, US rig counts have again increased for the tenth week out of eleven measured. The fact that oil is still supported close to $50 Brent and $48 WTI, tells me to expect another week of a double-digit increase in rig counts in the next week or two. Resiliency is showing itself in the US and may turn out to be the factor that shuts down any increase (or prospects of) in the price of a barrel of oil.

Regards,

George