Price changes for August 27th, 2015

Hi to all,

 

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

 

Heating and stove oils to drop by 3.7 cents.

Diesel to drop by 3.9 cents, and...

Gasoline to drop by six cents a litre.

 

In the markets...

 

China...It's all about China.

 

With the collapse of the price of oil, it's easy to point to China as an example of how dependent the world has become in using China as a "crutch" to support oil prices. We all know that as an emerging nation, China would have an effect on demand for world oil, but no one yet has considered what has been done by China to break it's initial dependence on oil. It is estimated by some that China is about three years away from putting domestic drilling regulations in place so it can try and develop its own reserves. Through the years, I've also run into small tidbits from China that others have ignored. Shell, for example, just a couple of years ago, signed a huge agreement with China to develop both natural gas and join with the state-owned oil company in developing other "sources" of oil resources. No doubt, if the "frack" goes ahead in China soon, it will have started to crack its dependence on OPEC oil and done massive damage to OPEC's chief customers. Where does oil go then?

 

OPEC countries worried

 

"Weaker" OPEC producers are beginning to worry over overall OPEC production and the Saudi drive to cut US domestic production. In what is beginning to look more like a suicidal motion towards trying to maintain market share, some of the smaller OPEC producers are beginning to question the moves by Saudi Arabia in over-producing to try to maintain market share and cut into US domestic costs to produce. It's costing smaller OPEC members to also absorb the hit to their own revenues, and has them calling for an emergency meeting to address the long-term goal of OPEC. Are we witnessing a crack in OPEC unity?

 

It's been a long drive back from the west coast, so, I'm going to leave it at that for now.

 

Regards,

 

George

Twitter @GeorgeMurphyMHA

Price changes for August 20, 2015

Hi to all,

Here's what  have for this week's price changes;

Heating and stove oils show an added 4/10ths of a cent a litre.
Diesel fuel shows no change this week, and...
Gasoline shows an additional 1.5 cents a litre at the pumps for Thursday.

In the markets

December 18th...
That's the key day to watch for as the International Energy Agency says is the earliest date by which Iranian crude will be released clear of sanctions. It's estimated that, Iranian exports from the country will amount to an immediate influx of 500,000 barrels of crude oil a day with another 500,000 to hit the markets in the intervening six months. Brent crude prices have been showing a little to the "down side" in the last coupe of days, out of par with the movement of West Texas Intermediate.

Refinery outages lead to tight gasoline markets. Prices rise
In the mid-western US states as well as western Canada, consumers too a huge hit at the pumps with gasoline spot prices rising as much as 10 to 20 cents a litre as a result of a Whiting, Indiana refinery outage that took 400,000 barrels of crude processing offline. With refinery capacity at 96.1 per cent last Wednesday, it shows just how tight the gasoline market was. Still, almost 605,000 barrels out of a possible 18.3 million barrels of refining capacity remains offline. Gas prices in Calgary hit $1.22.5 cents a litre as a result.

Speaking of Calgary...
It's a shining example of what can happen to a rapidly growing oil industry that gets handicapped by the lack of export infrastructure and a lack of secondary processing. Prices for Western Canadian Select sold at market yesterday for $22 US a barrel, while in neighbouring Edmonton, their Syncrude Sweet sold in the markets for $37 US and change. While projects like Keystone XL and projects pushing oil to the BC coast remain delayed, also delayed is any possible recovery of Alberta crude oils without a "way out", barring any other geo-political or economic factors.

Jet fuel surcharges persist...
I'm surprised at the lack of reaction from consumers who still pay absurd amounts in fuel surcharges, even though the price of jet fuel is down close to 37 cents a litre less than it was for the same time period last year. Market numbers show jet fuel selling on the New York mercantile exchange for 50.7 cents a litre, down from 87 cents a litre.
              Overseas, airlines based in Asia, like Japan Airlines and South Korean will be revisiting their fuel surcharges based on lower than expected oil prices. Japan Airlines expects their fuel surcharges to be half of what they were this time last year. Can't say the same for here. What is the policy to our Canadian airlines, WestJet and Air Canada?

That's it for this week,

George Murphy
Twitter @GeorgeMurphyMHA

Price changes for Thursday, August 13, 2015

Hi to all,

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

Heating and stove oils down by 6/10ths of cent a litre.
Diesel to drop by the same 6/10ths of a cent, and...
Gasoline to drop by 3.2 cents a litre.

Market news

China demand to hit oil?
Besides the fact that there's a problem worldwide with economic recovery, particularly evident are concerns around Chinese growth. Growth has been stagnant to say the least, with problems even arising in the Chinese trading markets. Add to that, the Chinese government's move late yesterday (today) to devalue its own currency in an attempt to attract more business to at least stabilize the downfall of industrial output. The move has led speculators to worry about the real problems in the China economy, and that, in turn, has led to another round of drops in oil prices. Fears abound about a further drop in oil demand in China, reflecting on oil.

Saudi's to drive oil lower?
If Chinese demand retreats as expected, a concerted move by Saudi Arabia to maintain overall production in the markets could lower oil prices to $36 US a barrel (WTI). The production figures out of Saudi Arabia show that 10.36 million barrels a day was pumped by the OPEC member in July. That leaves worldwide oil production at 2.9 million barrels a day more than what the world is consuming.

US domestic production keeps rising
Enter Uncle Sam...
Over the past eight months, US domestic production of oil has added close to 600,000 barrels a day, with US production hitting 9.4 million barrels a day. While OPEC is forecasting an added 90,000 barrels a day in consumption for the 2016 year, it hardly scratches both additional US domestic production and added oil to the markets from Iran, who boosted their own domestic production to 2.9 million barrels a day in anticipation of another entry into the markets. IF US producers can manage expenses in production costs, then oil prices are in a heap of trouble and bets for higher prices are off.

I'll leave it at that for now,

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Price changes for Thursday, August 6, 2015

Hi to all,

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

Heating and stove oils to drop by 2.25 cents....
Diesel to drop 2.3 cent, and...
Gasoline shows a drop of just 8/10ths of a cent.

As predicted, with the drop in the price of Brent and WTI the last two days, the Canadian dollar took another pounding against the US buck. It's the lowest in six years right now.

Consider this: If the dollar was at par with the US dollar right now, you'd be looking at prices a rough 18 cents a litre lower than they are right now.

Right now, refiner capacity remains tight with levels reaching close to 96 percent of overall US capacity, and inventories of gasoline still show signs reflecting the market volatility.

"Demand" continues to be a factor in gas prices. As we come to the end of the summer driving season, there's some hope of further retreat, but I expect refiners and speculators to play with the fact that refineries across North America will soon begin winter maintenance routines, and they'll use that "excuse" to keep prices elevated.

We'll see what happens!

That's it, short and sweet for this week.

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Price changes for Thursday, July 30, 2015

Good evening all,

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

Heating and stove oils predicted to drop by 1.25 cents a litre.
Diesel to drop by 8/10ths of a cent, and...
Gasoline to drop by 3.2 cents a litre.

Market noise
Bank of America on oil
Bank of America is projecting more weakness for oil to come in the third quarter of this year. Expectations of the company show Brent prices to average $50 US from their previous estimate of $54 US  a barrel. Prices for WTI (West Texas Intermediate) were expected to average $45 US a barrel from their previous estimate of $50 US.

US domestic production seen rising
US drillers added an unexpected 21 drill-rigs to the markets this week. The move was a surprise, but shouldn't have been with investors looking for a return on their investment as well as expectations from cost cutting measures. Those measures included everything from salaries to "re-fracking" previously producing wells to get new production. The move removes previous drilling costs with the assumption being that the well is already done, so the frack can occur. Canada added eight rigs over the same time frame last week.

Brent prices to falter amidst market turmoil?
Oil prices pushed lower this last regulatory session as market unease in China played heavily through the week and continues to do so. As stated last week, there were considerable debate from market speculators about the longevity and stability of the markets in China. While growth has massively slowed, stocks there continue downwards, increasing doubts of overall Chinese oil demand. As well, all bets are off now in how much oil Iran can add to the markets, considering the world situation with oil prices. Speculators feel that, with massive world inventories of oil out there, Iran's addition of oil to the pot will only hinder the glut problem on the markets, making it less likely for oil prices to recover anytime soon. Add to that problem a simple fact that, with Iran's entry back into the markets expected soon, competition amongst oil producers will only increase, with that likelihood that everyone is going to be forced to compete for market share.

On this date
Brent oil price on July 29, 2014?...$106.47 US a barrel
Those were the days, my friend!...

That's it for this week!

Regards,

George
Twitter @GeorgeMurphyMHA

Price chenges for July 23, 2015

Hi to all,

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

Heating and stove oils to drop by 1.4 cents a litre.
Diesel fuel to drop by an even penny, and...
Gasoline to drop by 2.1 cents a litre.

In the markets
Iran nuclear deal vs production
The nuclear deal with Iran has speculators more than skeptical and divided over how fast the OPEC country can overcome sanctions and get its oil industry moving again. While some speculators said last week that Iran would not be able to produce more than 500,000 barrels immediately for the world market, others are saying they can rebound production in less than four months, rather than the additional 12 months predicted earlier. It's going to be a "wait and see" approach that market speculators are going to have to take. Nothing bites the oil markets like reality!

August buying contract
Now, you'd hardly tell by the weather, but it should be a clue as to what's happening with gasoline prices this week. While gas prices are predicted to be down this week, it's a sure sign that we have to be close to the end of the August buying contracts. That means that the focus will shortly turn towards the distillate group of fuels. It's well known in the markets that, from the time of initial purchase of crude oil to the delivery of refined product, takes a rough forty five days to get to the consumer. Assuming that, we're now looking at speculators starting to turn their eyes later this week to distillate fuels like heating, stove oils and diesel fuel. The focus off gasoline this week with a slight drop in prices may simply be that; while the summer has not gone yet, the opportunity to make a buck in the markets off refined gasoline has come and gone. See what happens with gasoline for the rest of the summer, but futures prices are taking a dip as we get closer to September/October.

Canadian dollar drops
It should be no surprise that with the drop in the Canadian dollar against the US greenback as a result of the drop in interest rates last week, you could have been paying a lot less for gasoline than what I have here for this week. As compared to a month ago, the two cent drop in the Canadian dollar against the US dollar has cost you close to two cents t the pumps. What is showing as a 2.1 cent drop should be four cents this week, but thanks to the "wisdom" of the bank of Canada, its now a little harder for consumers to recover from this "recession". The drop in the dollar just doesn't affect fuel. It also hits consumers for anything, like food, that comes from the US.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Price changes for Thursday, July 16, 2015

Hi to all,

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

Considering all the moves in the international political arena, it may not be a lot of action in the refined commodity department, however!

Heating and stove oils show a drop of 1.8 cents a litre on the way.
Diesel fuel shows down by 2.1 cents a litre, and...
Gasoline shows an added 9/10ths of a cent.

Market news

Greece and the Euro
Greece continues to play in the markets, but as much as what people would have figured. With such a low gross domestic product and already an unemployment level that's pretty high, some are saying that Greece has played it's card on oil already. Greece amounts to a much lower GDP than China, which has it's own issues with the stock markets. There, the Chinese government has ordered government run agencies to begin buying stocks of private companies in order to maintain their value and help keep some semblance of order in trading. Some analysts are saying that we can expect to see another thirty percent devaluation of stocks there before stability reached their own markets.

Iran deal
While a deal over Iran's nuclear program has been signed, don't expect to see Iran's oil output to hit an added 1.8 million barrels right away. Analysts say that due to aging infrastructure, Iran can only produce an added 500,000 barrels a day more upon lifting of sanctions, and those sanctions have to be tested before they're lifted. Analysts also say that Iran will be able to add another 500,000 after six months has passed. But the kicker here is that Iran has over 30 million barrels of crude already in floating storage ready to hit the waves as soon as word is given. That's compounded by a total "floating" figure of 174.8 million barrels already waiting to go.

Iraq, Saudi Arabia continue to break production records. Libya back?
Word from Iraq shows that country increasing production again in July to amount to 3.86 million barrels, while it's neighbour, Saudi Arabia hitting production daily at 10.6 million barrels in what I believe is a move by those OPEC countries to stymy the revival of US domestic production. That's another reason why oil showed some retreat over the past week. To add to world glut woes, two of the fighting factions in Libya have reached an agreement to allow oil exports there to resume. Amongst the bloodshed, Libya has been exporting a rough 800,000 barrels a day through two coastal ports previously shut in.

Canadian dollar
The Canadian dollar against the US greenback lost another penny in a week that saw oil prices on the retreat again, albeit to the benefit of the US dollar. Whenever I see a retreat in oil, it's usually a time for speculators to invest in the US dollar, and that lowers our own, considering we have a dollar closely tied to performance of natural resources like oil.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA 

Price changes for Wednesday, July 1st, 2015

Here's what I have for this week's price changes. This week, prices will be adjusted at midnight tonight as a result of the Canada Day holiday.

So really, consumers and the media get this notice just ahead of the price change itself!

Here's what I have for this week:

Heating and stove oils to drop by 27/100ths of a cent a litre.
Diesel to drop by 3/10ths and...
Gasoline to drop at midnight by 1.4 cents a litre.

A potential deal with Greece over it's debt may be at hand, and that helped to support oil prices in today's trading. Oil traded just slightly lower on the fact that there was a potential up to notice-time, of a Greek default on debt payments. Most European markets, while still down today, were more or less after insulating themselves from that possibility as a result of Greece's last troubles back in 2008-09.

In the meantime, there could be some more troubles with Brent prices. This time, news out of Antwerp is telling of steady builds in overall Brent inventories that may put those oil prices at risk of slipping. Capacity in Europe for oil storage is also starting to show issues in other major European regions as well as overall crude oil inventories keep climbing. In the meantime, oil in floating storage in the Arabian Gulf and centres close-by, show another climb, with oil inventories hitting 183.7 million barrels.

Closer to home, in the US, we could be witness to a bear awakening as US rig counts surprised everyone with the addition of TWO rigs to add to the weekly rig count. That's the first increase in the number of operable rigs in the US since December, 2014 when oil prices initially collapsed! Seems that cheaper operational costs may be factors in bringing some rigs back to life, but could also be a straw that broke the Saudi back spurring them to add production to stem the flow of US oil.

We'll see what happens there!

That's it from me this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA 

Price changes for Thursday, June 25, 2015

I wanted to say first off a true heartfelt "Thank you" for all the kind words. I'm looking forward to finishing my term in November and getting more time with family. I think it's them that needed a break, so, I'm going to give it to them...

The numbers for this week all point down. Go figure...I pack it in and the price of gas drops!...

I should quit more often! Here's what I have for this week's price changes:

Heating and stove oils are pointing down by 4/10ths of a cent.
Diesel is also pointing down, but by a half cent, and...
Gasoline shows a drop of 2.5 cents a litre.

The Canadian dollar remained relatively steady against the US greenback this week.

OPEC production is expected to pick up again in the coming weeks that may throw a wrench into the oil markets and potentially send some prices down lower. With Iran nuclear talks set to begin, speculators are widely expecting that Iran, if sanctions are lifted, will begin an immediate climb to an output level not seen since 2008 when sanctions were tightened. Right now, Iran is pumping out 2.8 million barrels a day, but is widely expected to hit 4 million barrels if sanctions are removed.

Libya officials are saying to expect that country to start exporting oil again shortly. Government officials predict that output there will hit 800,000 barrels a day by July in a move that could add more oil to an already over-supplied European market.

Saudi Arabian officials are saying that, if the world need arises, they can boost production capacity by between 1.5 and 2.0 million barrels a day, remarkable considering the country already put out 10.3 million a day last month.
 

I'll leave it at that for now!

My regards, and again, thanks for all your thoughts and prayers!
George Murphy,

Price changes for Thursday, June 18, 2015

Hi to all,

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

No changes expected for heating and stove oils. Numbers show close to zero predicted, but remember my margin for error of 3/10ths of a cent a litre.

Gasoline shows an added 3.1 cents a litre coming for Thursday.

Well, you might be thinking "every excuse in the book to raise prices" and you may be right, but there is some evidence out there to support why speculators are starting to pour some dollars back into the gasoline trading market again.

Demand is up, plain and simple...

Here's my read:
With gasoline being consumed at a good rate now, because of the summer season, no doubt, I'm seeing refineries running at a little better than 94 percent of overall capacity. I haven't seen a number as high as that in a long time, but it tells you exactly how much gasoline is being used. Right now, in the US, demand has outpaced itself and has grown an added 1.1 percentage points in the last four weeks alone. They're consuming gasoline in the US at a remarkable 9.35 million barrels a day, while capacity has only allowed for 9.1 million barrels.

While OPEC has again produced at another record number, the oil they had in floating storage is starting to move lower. Latest numbers I have show a drop of close to 20 million barrels from just last week. Is this a sign that someone is buying the stuff, or is this normal in the rotation of their inventory? I'm keeping a close eye to this one.

Water shuts down most refineries. That, and a lack of electricity. Don't expect the remains of tropical storm Bill to affect the markets too much. When it landed on part of the Texas coastline yesterday, it landed in an area far from the major area for refining in the US. Most refining facilities are centered close to the Louisiana border with Texas, the same area that got pounded with heavy wind and rain from hurricanes Rita and Katrina in 2005.

I'll leave it there for this week!

Regards to all,

George
Twitter @GeorgeMurphyMHA 

Price changes for Thursday, June 11, 2015

Sorry I'm late, but computer issues at home didn't allow me to get in and post last night!


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

Heating and stove oils show down by 2.0 cents a litre.
Diesel shows a drop of 2.2 cents a litre, and..
Gasoline shows a very modest drop of just a half penny.


Better than nothing, I guess...


The Canadian dollar remained relatively steady against the US dollar this week against the volatility of oil. Numbers for oil were simply all over the place with rapid movements up and down.


Part of the reason for oil's increase the past two days itself may seem odd. While industry insiders have been saying that OPEC is pumping record amounts to maintain revenue, Saudi Arabia itself responded on this rare occasion to tell the same industry insiders that they were pumping record amounts in order to meet demand from their clients. Oddly enough, the numbers for oil in floating storage seem to show something happening with all that extra oil the Saudi's have on hand. Floating storage numbers showed a drop of close to nine million barrels this week to sit at 173 million barrels.



Unusual in itself, that one got the markets moving amidst speculation that the Saudi's may be right. An open question in itself: While the Saudi's are supposedly pumping record amounts, if demand does pick up, will there be enough capacity for Saudi Arabia, or OPEC,  to meet it?


Speculation as well over Iran being able to enter the markets with an added 1 million barrels a day. That was the number a lot of insiders were kicking around as a possibility that an agreement would be reached over access and monitoring of Iran's nuclear program. The details of the agreement were supposed to be finalized this week, but politico's in Iran are worried over sovereignty and security issues with monitoring of sites not previously agreed to.

Finally, while the Saudi's continue to pump to knock out smaller US producers, their program seems to be working. But here in Canada, it seems smaller producers continue to come back online. Due to the lower Canadian dollar, one can only speculate, but rig counts in Canada climbed another 18 rigs last week while the US dropped 10.


I'll leave it at that for this week!

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA 

Price changes for Thursday, June 04, 2015

Hi to all,

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

Heating and stove oils add 15/100ths of a cent.
Diesel adds 2/10ths of a cent, and...
Gasoline adds 1.7 cents a litre.

The Canadian dollar took another pounding against it's US counterpart this week as the US dollar gained on speculation of impending interest rate increases to come. That dropped the Canuck buck, which lost another two cents against the US greenback and helped to again raise gas prices this week as well.

In the meantime, OPEC meets later this week, June 05th in Vienna, to discuss production quotas that seem to have hit new records themselves in spite of lower demand for oil. OPEC pumped 31.579 million barrels a day last month in an effort the Saudi's are calling to knock out higher cost producers. Iraq produced a record 3.87 million barrels a day of that.

But there's danger ahead for oil prices, if some market indicators are right. The decline in rotary rig counts in North America may be slowing, as all signs point to lower cost producers coming back online in Canada. Here, the rig counts were up by 26 for the last week with the US just down by ten. Lower costs to produce here can partially be cited here for the additional working rigs. That, and an increase in oil prices over recent weeks has raised the bar on profitability.

As well, I keep watching the floating storage numbers increase in the Middle East with floating storage of oil now accounting for 185.1 million barrels in tankers with no-where to go. IF OPEC keeps pumping out a record production for oil over the next while, it could lead to another collapse in oil prices in their vain attempt at hitting high cost producers.

I'll leave it at that for this week! Any questions, feel free to drop me a line!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Price changes for Thursday, May 14, 2015

Hi to all,

Here's what I have for price changes for this week, all ahead of our "May two-four" weekend:

Heating, stove oils and Diesel fuels to decrease by 7/10ths of a cent a litre.
Gasoline to drop by 1.8 cents a litre.

Saudi Arabia continues to break records when it comes to overall domestic production. Not letting up any, in spite of lower prices, the lead OPEC member continues to pump out product in the face of a meeting to discuss OPEC production later in June. The Saudi's pumped close on 10.3 million barrels a day last month.

In the meantime, their production continues to show a heavy build in "floating storage". With product nowhere to go, oil keeps piling up in tankers that now totals almost 174 million barrels, up almost 20 million barrels from a short three weeks ago. A strong sign that the glut continues, the fact that US domestic might start to pick up again may compound the problem of a glut in the markets, if the Saudi's don't act first.

Here's why...

The decline of rotary rig counts is beginning to taper, probably influenced by the fact that US prices for West Texas Intermediate have climbed to over $61.00US a barrel over the last three weeks. It may be a sign that US producers will come back online knowing they can get some return on their investments. Some 4700 wells are ready for a turn of the spigot to bring more oil into the US markets if prices continue up, and that could cause a breakdown and collapse again in oil prices if consumer demand doesn't rise to meet it. So far, only gasoline prices have enjoyed a slight run-up in prices as the US summer driving season approaches.

The Canadian dollar has shown mostly steady against its US counterpart, but may be showing signs of life if the price of oil keeps rising. Any turnaround of US domestic production of oil could change that quickly however. Refined product prices have also remained steady against rising oil this last week. Oil prices themselves have shown to be volatile with sharp increases, followed by just as sharp declines as market data warrants.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Price changes for Thursday, May 7th, 2015

Hello everyone,

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

Heating/stove oils to increase by 1.6 cents a litre.
Diesel to increase by 2.0 cents a litre, and...
Gasoline to increase by 1.6 cents a litre.

With oil prices increasing, refined commodity prices have also been rising. Anticipated builds to inventories are slowing somewhat and may be reflective of the slowdown in US domestic production being added, or it may be a sign that demand for gasoline and related products is picking up again.

Chinese demand still remains weak amongst emerging nations. With the latest news on lower than expected manufacturing data, it has to be a disappointment for those nations hoping to export there. China remains almost shut out for the time being as a potential market to pick up any excess of supply out there.

Finally, look here in the coming days as government has announced it will put taxes back on your heat and light bill. I will be posting a petition for you all to sign and have others sign as well as we are again back to the drawing board when it comes to having the tax off heat. It is, I feel, an important issue for everyone from seniors to those on lower incomes. Simple fact of the matter is that this is just as important to me to not have a tax on heat as much as there's no tax on food!

I hope you will help me in this quest!

Regards,

George
Twitter @GeorgeMurphyMHA

Price changes for Thursday, April 30, 2015

Hello to all,

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

Heating and stove oils to increase by 11/100ths of a cent.
Diesel fuel to increase by 6/10ths of a cent, and...
Gasoline shows an added 2.5 cents a litre at the pumps.

Gasoline inventories continue to experience some slight drops as the run-up to the US summer driving season approaches. The traditional start of the season begins on the US Memorial Day holiday, our Victoria Day weekend. As of last week, gasoline inventories were recorded down another 2.1 million barrels.

Overall crude oil inventories out of the US last week showed another build of 5.3 million barrels.
Russia will meet OPEC members ahead of OPEC's regularly scheduled meeting in mid-June to discuss a possible cut to overall OPEC production. No doubt, the Russians would like to see a cut instituted as it would possibly raise Brent crude prices, which have been taking a pounding all this year. Present OPEC production numbers show their group producing just over 30 million barrels a day.

I'm watching rig counts as of late.
With all the news of the industry parking drill-rigs in recent months, it seems the decline in operational rigs is starting to slow. Last week saw a slight decline of 22 rigs in the US with one rig down in Canada. Any halt in decline of rigs is probably a sign that they may be starting to think about coming back online as crude prices have been seen to increase over the past ten days or so.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA 

Price changes for Thursday, April 23, 2015

Hi to all,

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

Heating and stove oils add 2.47 cents a litre.
Diesel adds 2.9 cents a litre, and...
Gasoline shows upwards by 3.1 cents a litre.

Refined product prices were driven upwards this week as a result of, not just the increase in crude oil prices, but also by the fact that last week saw only a modest build in overall US inventories.

Gasoline demand also shows signs of picking up in the face of higher refinery capacity coming back online. With capacity up, and numbers showing a draw against gasoline inventories, it was seen as "natural" that speculators would take advantage.

But how long can the markets follow the snow job of rising world crude supplies that still shows a glut in supply? Saudi Arabia produces a near record of an added 650,000 barrels per day in March month, well ahead of what was the norm. To add to the false reading from the markets, news this morning that storage capacity continues to be taken up in the markets. With another 158 million barrels in floating storage, it makes one wonder how long speculators can go before the truth in the markets is realised.

To add to the Saudi storage concerns and the building of false demand picture worldwide, you can also add another factor that no one is talking about...Yet!

With oil rising, it's only a matter of time before smaller producers start playing with the thought of getting back into the market of selling and pumping crude oil. With US domestic production now reaching a record 9.3 million barrels a day, almost 13% more than the same time period last year, speculators surely can see that this latest round of crude oil increases may be very well short-lived.

Regards to all, and if you have a thought, be sure to leave a comment!

George Murphy
Twitter @GeorgeMurphyMHA

What I'm watching in the oil markets, and what you should too.(Part one)

People are often asking me where I think oil prices are going, and what factors I'm watching out in the markets. I guess sometimes some want to build evidence on where oil prices are going because of a vested interest, or they're simply concerned with provincial finances.

...and right they should be on the last point...

It's obvious that right from "day one", we made the mistake of simply relying on revenues gained from the sales of crude oil off our shores. It's easy to say we got lazy over economy building because we had lots of cash in the coffers. This year will prove our folly over over our dependence on the price of oil, rather than the "traditional way" of building a sustainable economy.

Even easier to say that all was misdirected in the past and that not enough was invested in our future here. Either point has validity and each point may itself be wrong.

Either way, "dependence" on oil money has gotten us into some troubles with really no one answer on how to get ourselves out of the situation we now find ourselves in. If we are to get out of the situation, we're still going to have to depend on the growth of our oil sector to do it. That, my friends, is not an easy sell, although it is a sale that can be made...IF prices remain where they are today.

Let me explain:

Factor 1
A lot has been said of the effect that smaller oil companies have made on US domestic production. Some may argue with validity that "small oil" can't keep it's head out of the water without prices being higher. With the parking of drilling rigs, it seems that their case may have some valid evidence to back the fact that $55 US would be a "boil over" point to where frackers may explore and produce to overall US domestic production again, and with Brent oil prices now starting to push $63 US a barrel and West Texas Intermediate producing sales at $50 US, we may again be on the edge of seeing smaller producers re-entering the markets. Important factor to watch is the US rig count. Published pretty much on a weekly basis, watching this number start to show stability will probably coincide with oil prices that will also do the same.

Any increase in the overall rig count will, in all likelihood, start to show another drop in WTI prices, thus dragging down Brent prices again.

Factor 2:
US demand: First, for gasoline may increase the value of some oil, but in all likelihood affect gasoline spot prices first. While refiners are making a fortune right now with oil at present levels, those profits in this sector start to diminish with increasing crude oil acquisition costs. Either way, with prices somewhat lower, any company that is fully immersed in the oil industry, from the initial search to the final product, becomes a winner under the present market conditions. I don't believe that "Big Oil" even wants to see prices high, if they can make it financially further down the food chain! Summarily, demand for both gasoline and distillate products remains tepid at best, and that's not going to be a real motivator to bring prices up.

Factor 3:
Conservation efforts/Consumer outcry: While arguments for global warming persist with a lot of evidence to back it up, even more disconcerting for increasing oil prices has been conservation efforts. Don't ever doubt that consumer outcry has also been a positive motivating factor in the efforts behind conservation and protection of the environment as well! The simple fact is that, not so long ago, consumers were upset with higher oil and gasoline prices, and that spurred on efforts of government to answer back for their constituents. Consumers wanted relief and protection from higher energy costs that influenced decision-making. has had a huge effect on world consumption of oil products, and will continue to do so in the future. Witness higher automotive mileage claims and home retrofit programs worldwide, and locally, look no further to the supposed reasoning and the justifications around the Muskrat Falls hydro-electricity project.

In part two, I'll have more factors that I use in everyday life to balance my reasonings behind energy costs, and what I watch to determine further direction in oil prices. If you have any comments, feel free to drop me a line!

I will be back tomorrow night with the final numbers for this week's price adjustments!

Regards for now!

George Murphy
Twitter @GeorgeMurphyMHA

Price changes for Thursday, April 16, 2015

Hi to all,
 
Here's what I have for this week's price changes:

Heating and stove oils show an added 2.21 cents a litre.
Diesel shows up by 1.6 cents a litre, and...
Gasoline shows a very modest drop of 8/10ths of a cent.

While oil prices started off this week at a modest $55.16 a US barrel (Brent), prices gradually started an increase after the US Energy Information Administration stated that we should start to see a drop in production coming from some of the US fracking fields where oil drilling rigs have been "parked" since prices retreated from historic highs. The EIA is predicting a drop of 57,000 barrels a day in May month as a result of a halt in further production because of higher prices.

Don't look for a surprise spike in prices, unless something extraordinary happens though. If prices do increase, look for rigs to go back to work and bring prices lower again.

Surprisingly, against all this, there are still strong signs and, indeed questions that need further research as to how come oil prices haven't retreated further based on other evidence out there. Over the last week, for example, crude oil in floating storage (in tankers being used for such) has risen dramatically to count at 152 million barrels. That's an added 20 million barrels of crude oil stored away over the last three weeks. As well, the prospects of Saudi Arabia increasing production this summer to a record 11 million barrels a day has yet to hit the markets.

Needless to say, if I was trading in the markets, I would be worried over the two notes here. The prospect of Saudi Arabia waving the production stick should really be enough to keep Brent prices lower again for the coming future. That prospect on the futures markets still shows little growth in crude prices. Numbers show a mere $63 US a barrel in the middle of 2016 and $68 US a barrel for the full year of 2017.

Might as well get used to lower oil for a while...

That's it for now!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Price changes for Thursday, April 9, 2015

Hi to all,

I hope Easter was good for everyone and that for some it was a time of rest. At my place, between the twins, it was "chocolate madness"...

Either way, here's what I have for this week's price changes:

Heating and stove oils show a slight drop of 7/10ths of a cent a litre.
Diesel drops by 9/10ths of a cent, and...
Gasoline shows up by 1.8 cents a litre.

No doubt about it, but speculators know the start of the summer driving season is on the way, and that right now is about their only hope of scraping together any kind of a profit on their fare. April month has always been the month where we have historically seen that run-up to the US Memorial Day weekend (our May 24) that marks the start of the heavy demand gas guzzling season.

Or, at least that's what investors are hoping for!

The Canadian dollar increased slightly on news of rising oil. Earlier in this session saw skeptics balk at talk of the lifting of sanctions in Iran that would lift world crude stocks up by another one million barrels a day. They think that it will take some time to bring Iranian crude back to the markets, as the sanction agreement talks about removing sanctions as Iran conforms to the agreement, rather than immediate. The deal comes into full effect by June 30th.

Talk in the markets also reflected on Saudi Arabia increasing prices to its Asian customers, probably in a move over concerns of war costs as the drama in Yemen continues to unfold, and not because of any shortage in product availability. The Saudi's have to be careful about losing market share to other sources of oil out there. At this point, they really can't afford to lose any, now that they have a war of their very own!

"Man's inhumanity to man..."

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA 

Price changes for Thursday, April 9, 2015

Hi to all,

I hope Easter was good for everyone and that for some it was a time of rest. At my place, between the twins, it was "chocolate madness"...

Either way, here's what I have for this week's price changes:

Heating and stove oils show a slight drop of 7/10ths of a cent a litre.
Diesel drops by 9/10ths of a cent, and...
Gasoline shows up by 1.8 cents a litre.

No doubt about it, but speculators know the start of the summer driving season is on the way, and that right now is about their only hope of scraping together any kind of a profit on their fare. April month has always been the month where we have historically seen that run-up to the US Memorial Day weekend (our May 24) that marks the start of the heavy demand gas guzzling season.

Or, at least that's what investors are hoping for!

The Canadian dollar increased slightly on news of rising oil. Earlier in this session saw skeptics balk at talk of the lifting of sanctions in Iran that would lift world crude stocks up by another one million barrels a day. They think that it will take some time to bring Iranian crude back to the markets, as the sanction agreement talks about removing sanctions as Iran conforms to the agreement, rather than immediate. The deal comes into full effect by June 30th.

Talk in the markets also reflected on Saudi Arabia increasing prices to its Asian customers, probably in a move over concerns of war costs as the drama in Yemen continues to unfold, and not because of any shortage in product availability. The Saudi's have to be careful about losing market share to other sources of oil out there. At this point, they really can't afford to lose any, now that they have a war of their very own!

"Man's inhumanity to man..."

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA