Price changes for Thursday, April 28, 2016

Hi to all,

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

*Heating and stove oils show an increase of 2.9 cents a litre.
*Diesel shows an added 2 cents a litre, and...
*Gasoline shows an added 1.6 cents a litre at the pumps.

Market highlights

*While the Canadian dollar has risen slightly in the last week against its US counterpart, it still wasn't enough to absorb a corresponding rise in the basic cost price of most fuels I measure. All spot prices have shown a startling increase that goes hand in hand with rising oil prices. As a result of rising oil, the Canadian dollar has increased a rough 1.3 cents against the greenback.

*Consumers in Newfoundland and Labrador will feel the pinch this coming winter with the end of the Heating Rebate program in this year's provincial budget.
Consumers in Labrador will particularly feel the hardest hit living in a harsh environment with no benefit of the rebate program that saw considerable money to consumers to assist them with paying higher heating costs.

       Consumers will also be tagged with an added two percentage points to heating costs.
Government should re-instate the rebate program and render assistance to those who will be faced with higher energy costs. Again in this province, people will be forced to choose again between food and heat!

        Bring back the rebate and remove the tax on the necessities like heat!

*As predicted months ago, a new bottom line for the start of the return of US domestic drilling programs is slowly starting to form a picture of where we can all expect oil prices to top out.
$50 US is the new floor for oil where it is widely expected to see US domestic drilling and production programs to recover from the last year's drop in oil that initially shut down drilling.
It's also widely seen as a reason why speculators have been pouring dollars into oil this week. However, the spectre of a world over-supply of oil still hangs in the balance, so there's still predicted to be some volatility in pricing.

*Gasoline demand has picked up in recent weeks with US gas production alone hitting 9.4 million barrels a day, an increase of 3.9% over last years figures!

That's it for this week!

Regards,
George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, April 21, 2016

Hi to all,

Here's what I have for this week's price changes. With winter blending over until the fall, the numbers should be more accurate for heating and diesel numbers.

*Heating and stove oils show an increase of 1.4 cents a litre.

*Diesel fuel shows an increase of 1.7 cents a litre, and...

*Gasoline shows no change.

Market highlights

Canadian dollar up

*The Canadian dollar continued to rise against the US dollar this past week, increasing by an average two cents against the Greenback. While US spot prices increased for gasoline this past week, the rise in the dollar absorbed any increase to Newfoundland and Labrador consumers.

Budget reaction

*The budget will prove to be a very painful one this year with increases to energy consumers, especially for those who use the main transportation fuels of diesel and gasoline.

         Both fuels will increase June 2nd by close on twenty cents a litre by the time taxes are accounted for on top of the proposed 16.5 cent a litre increase. Total provincial take in road taxes alone will amount to 33 cents a litre, the highest in Canada. The rumours I heard of a possible five cent a litre increase in the works makes the actual that occurred that much harder, and it's really obvious that consumers could see the return of fuel surcharges to anything being moved by ground transportation.

         Food prices could again be on the upswing in June month with additional fuel surcharges on freight and tourism efforts geared toward drive-in tourists may have been knee-capped with a broken promise from the markets of the potential for lower summer fuel prices.

        This increase makes it harder for everyone, including those who are in business and needs to be rejected outright!

Doha meeting failure

*Meetings in Doha, Qatar aimed at the world's major producers limiting production were a failure this past Sunday as agreement on reaching production limitations failed to meet with any concrete actions by both OPEC and non-OPEC producers. People are saying that they "need more time" to achieve the objectives of any world cut to production and they may try again for agreement in June at the next regular meeting of OPEC.

             I'll keep a close eye on that...

That's it for this week.

Be sure to let your voices be heard over the budget. Call and contact your MHA and be sure to let them know your simply not going to take this one lying down.

Any questions, feel free to drop me a note, and don't forget to share this note!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Talks in Doha, Qatar a failure from the start

It's not good news for anyone hoping to see oil prices continue to rise.

Talks in Doha, Qatar amongst some of the world's major oil producers failed to reach a final agreement on cuts to production that would have helped to stabilize oil prices.

Hopes amongst attending nations was to see an agreement hammered out that would increase oil revenues to these oil nations, but Saudi Arabia threw a wrench into talks at the start of the day with an expectation by the world's number one producer and exporter that all OPEC nations would participate in production cuts. Word silently hinting to Iran to join in.

It was the Saudi's last hope, as well as OPEC's...

Iran, the major bone of contention, was expected to follow along as a fellow OPEC member, and sign on to the "gentleman's agreement" to maintain output at January levels ranging close to 32.4 million barrels a day. Iran, fully aware of it's own standing amongst OPEC members, already had in place it's own position as regards to their own nation's output: They fully expected to replace lost market-share from sanctions placed on the OPEC member in UN resolution 1636 that saw production curtailed and shut in.

Saudi Arabia was an OPEC member that fully benefitted from Iran's lost customer base...

Was there any hope of these nations reaching consensus in Doha based on a mutual dislike for each other?

While some thought there would be, it seems that the conditions were already set in the oil markets for a complete and utter race to the bottom of the barrel to oil prices. While some thought that $40 US was a new bottom, it seems more than likely that a downwards slide in oil prices is about to begin again.

While this is an oil war no side will win, both fully deserve the market-share they so rightfully deserve.

"Pump madly and keep pumping away" seems to be the new OPEC order of the day, every day that much closer to the end of the organisation that held world economies hostage for so long.

Somehow, it all seems so fitting...

Regards,

George
Twitter @GeorgeMurphyOil

Price changes for Thursday, April 14, 2016

Hello to everyone,

Not good news if you're into low prices for all fuels. With winter blending now a "thing of the past" until the fall, the numbers for heating oil and diesel fuel should show more accuracy in the next two weeks.

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

*Heating and stove oils show an increase of 2.9 cents a litre.
*Diesel fuel shows an increase of 2.3 cents a litre, and...
*Gasoline shows an added 3.3 cents a litre at the pumps.

Market highlights

*I'm expecting a hit on this Thursday's provincial budget.
      It shouldn't be any surprise if we see government increase its revenue stream by increasing the provincial road tax component of both gasoline and diesel fuel. Possibilities amount to anywhere up to a nickel is being kicked around and is within the realm of possibilities. Up to five cents a litre is being heard out there, but my sources simply won't confirm this.

*Talk in the international oil markets all are focused on April 17th's important meeting set for Doha, Qatar between OPEC and non-OPEC producers attempting to hammer out an agreement on limits to production, all in a vain attempt to give support to oil prices. Oil has been trading well up this week, mainly on speculation that this meeting will bring a measure of success in helping any recovery in oil prices.
       Norway has already stated that they will not be participating. Iran has said a "yes" to attending the meeting. I wonder if Canada will be represented?

*US inventories of crude oil took a dip last week dropping nearly 4.9 million barrels as refineries in the US picked up speed and output. The uptick in capacity utilisation meant an increase in gasoline inventories last week of 1.4 million barrels. But the news on that front wasn't enough to stop the run-up in gasoline prices on the NYMEX exchange ahead of the traditional start of the US summer driving season. Gasoline spots increased along with crude oil acquisition prices.

*Oil prices have increased by an average $5 US on both West Texas Intermediate and Brent crude prices this last seven days, while the Canadian dollar has gained a rough two and a half cents against its US counterpart in the same timeframe.

I'll leave it at that for now.

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, April 7, 2016

Hi to all,

Here's what I have for this week's price changes. Keep in mind the winter blend that affects both heating and Diesel numbers!

*Heating and stove oils both show a drop of 2.6 cents a litre....
*Diesel fuel shows a drop of 3.4 cents a litre, and...
*Gasoline shows a modest drop of a half penny a litre.

Market highlights

*Oil started another retreat this week as speculators began to doubt whether an agreement would be reached on total output levels by both OPEC and non-OPEC members. According to a news source, an agreement has been reached ahead of an upcoming meeting in Doha, Qatar on April 17th.

*Iran has no intention of signing on to the fixed output agreement at this point. Production levels there continue to increase along with that of Iraq, who both helped to add an additional 90,000 barrels on to OPEC's total March output.

*Last Wednesday's inventory report from the EIA was a little bit bullish and probably gave a good snapshot of where prices may be headed in the next bit. While distillate prices are lower because of warming US weather, gasoline remains steady ahead of the summer driving season-for now.
The report showed an increase in refiner capacity, growing output an additional two percentage points. While gasoline inventory was down, the numbers seem to show that gasoline demand can be met for the rest of the summer. That helped gasoline spot prices, as well as futures prices, start a slow retreat. That's why we're looking at a very modest drop in prices this week.

That's it for now!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, March 31, 2016

Hi to all,

Here's what I have for this week's price changes. Keep in mind winter blending that throws off heating and diesel numbers a little from the actual that may occur!

*Heating and stove oils show a drop of 1.1 cents a litre....
*Diesel fuel shows a drop of 1.3 cents a litre, and...
*Gasoline shows a big increase of 4.9 cents a litre.

Highlights

*While speculators have been making huge pushes in the gasoline markets, we could be on the edge of seeing a second drop in oil prices towards the thirty dollar a barrel range. Considerable evidence suggests that the recent spike in oil prices has been overdone, and that the actualities of a glut of oil out there will again catch up to reality: that oil is over-valued. Countries who have agreed to limit production simply aren't going to be able to make enough of an impact in the markets to bring prices back to sustainable levels.

*In the meantime, gasoline futures have continued to rise the last week along with New York harbour prices. Another draw on US inventories last week of 4.6 million barrels again showed an uptick in demand ahead of the US summer driving season. Any build in inventories in the coming six weeks will probably stop the increases to consumer prices. Refinery capacity numbers have also been a little low ahead of summer due to spring maintenance, and it is anticipated that gasoline inventories will pick up with any increase in refinery production levels.

    The next US inventory report is due again tomorrow, noon Newfoundland time (NST).

*Key OPEC member Iran is not throwing their weight behind any limitations in production. The sanction-free country has announced that it will not even consider any kind of production limits until it has hit four million barrels a day production, from present levels of 3.1 million barrels. The news has to come as a disappointment to neighbouring Saudi Arabia who took over some of Iran's customers when sanctions were first placed on Iran in 2006 with UN resolution 1696. The past, it appears, is coming back to bite the Saudi's.

That's it for this week!

Don't forget to share this note. Any questions, feel free to drop me a note!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, March 24, 2016

Hi to all,

Here's what I have for this week's price changes. Remember the winter blending that may affect heating and diesel fuel prices.

*Heating and stove oils show an added 7/10ths of a cent per litre....
*Diesel fuel shows an added 4/10ths of a cent, and...
*Gasoline shows an added 9/10ths of a cent per litre.

Market highlights

World oil production meeting?
OPEC and non-OPEC producers will meet in Doha, Qatar this coming April 17th to discuss future actions geared towards limiting production levels. It's been a bone of contention between Saudi Arabia, Venezuela and Russia that all producers should take a role in cutting oil production to bring world oil supplies back into balance.
Iran however, has no intentions of discussing the possibility of limiting its own production levels until production reaches four million barrels a day from their present level of 3.1 million barrels a day.

Closely watching gasoline
With futures prices sharply up over the past three weeks, I'm keeping a close eye to spot prices that are being affected as a result. Spot prices are present-day reads, while futures prices are speculators bets thirty to forty five days down the road. Futures prices have been rising ahead of the summer driving season that is usually marked by the US Memorial Day holiday weekend in May. The run-up to the season usually starts in March, and is well on pace by speculators to add some increases at the pump. Right now, futures prices are running around $1.50 a US gallon, while the actual spot for today has hit $1.31 a US gallon. Factors that could affect the spot outcome could be factors like inventory builds/draws, refinery capacity levels, or even demand.

I'll keep you all informed here, if I notice anything substantial on the way!

That's it for this week!

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, March 17, 2016

Hello to all,

All the data is in. Here's what I have for price changes for this Thursday. Keep in mind winter blending!

*Heating and stove oils show a modest increase of 8/10ths of a cent litre....
*Diesel shows an increase of 2.1 cents a litre, and...
*Gasoline still shows an increase of 4.1 cents a litre.

Highlights

*Iran is not set to talk about a possible drop in production with Saudi Arabia, Venezuela and Russia until it has hit full stride in gaining back the same production levels it had hit before sanctions were placed on it. If that's the case, then Iran could be set to increase production by an added one million barrels a day by June. Will the Saudi-Russia maintenance of January production levels hold? It's doubtful.

*With oil now in retreat again, thanks to the news from Iran, the Canadian dollar has also lost some ground against the US greenback, losing about a cent and a half the last couple of days.

*Gasoline demand may be on the up-tick, that's if US inventory data is correct in telling the story. US gasoline inventories fell short of expectations last week with a draw of 4.5 million barrels. Crude inventories again climbed last week, reaching a historic high 519 million barrels. 3.9 million barrels was added, showing that the oil glut continues to weigh on the markets.

That's it for this week!

George
Twitter @GeorgeMurphyOil

Is there a new meaning of "company growth"?

I'm asking you this for a reason...

About a month ago, Venezuela, Russia and Saudi Arabia had a meeting to discuss production cuts that would be undertaken by the countries in an effort to prevent any other crude from adding to the glut of oil worldwide, now estimated to be in the millions of barrels, with about 1.75 million barrels a day added to it.

Some say the excess supply exceeds three billion barrels, a not-very-small amount. It would take the world 33 days to consume it, and for the world not to produce one drop while we're doing it.

But, it was an interesting comment coming from the meeting of the minds that got me thinking the prospects to Big Oil in the future, if they follow the writing on the wall from the new group bent on halting production growth. You see, they also picked up the charge that other producing countries should do likewise and also limit production to help pick up the price.

That's a huge "ask"...

Now, if I was the chair of the board at a major oil company, I would have to be thinking about what the Saudi-Russia alliance were saying. Essentially, they were saying that, because the whole world was awash with black gold, they would have to have a hand in helping them to limit production...

They were going to have to limit the growth of the company that reports to their own share-holder.

Think about that for a minute.

In what must be an almost impossible "ask" of Big Oil, they're being asked to limit production that could affect everything from investment by shareholders, limiting their own exploration programs, refining, storage,  and most especially, take a shot at their profitability and dividends to their shareholders.

Quite a corner to be painted into now, isn't it?

"Cut production, or open the floodgates to lower oil prices".

Boy...I'd love to be a fly on the wall of the BP or Exxon-Mobil boardroom!

All the best,

George

Price changes for Thursday, March 10, 2016

Hi to all,

Remember the winter blend of fuels that may throw off the heating and Diesel fuel numbers somewhat.

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

*Heating and stove oils both show an added 2.7 cents a litre up.
*Diesel fuel shows another 3.1 cents a litre up, and...
*Gasoline shows an added 4/10ths of a cent a litre up.

Highlights

*The drive for $50 US is on as OPEC and other non-OPEC oil producing nations are set to meet sometime around March 20th to discuss further moves to limit production.
OPEC member Saudi Arabia and Russia are both looking for other nations to join them in limiting production levels to "take care" of a world oil surplus that has been driving down prices to historic lows. I'll be keeping an eye to this one!

*The move has started by speculators on gasoline prices for the summer. As April trading markets opened, speculators moved in an attempt to ramp up prices ahead of the summer driving season. Traditionally, that move starts around the April buying contract, but right on cue, prices started out almost thirty cents higher than the close of the March buying contract the month previous.
We'll be watching this one as any inventory building or drop in consumption ahead of May month may help to keep prices low. Right now, because of speculators are pouring money into the gas trading market, it is driving up spot prices to the point that we may see further price increases at the pumps next week.

    I'll also give you the "heads up" when I see these numbers up, so stay tuned!

That's it for now!

Any questions, drop me a note!

George Murphy
Twitter @GeorgeMurphyOil

Price changes for Thursday, March 3, 2016

Good evening everyone,

Here's what I have for this week's price changes. Keep in mind the winter blend that may throw off the heating and diesel numbers a little. As well, don't forget my margin for error is three tenths of a cent a litre!

*Heating and stove oils show a 4/10ths of a cent a litre increase....
*Diesel fuel shows an added 3/10ths of a cent, and...
*Gasoline shows an added 1.1 cents a litre increase.

Market Highlights

*The Canadian dollar continues to rise against the US greenback, this week with the Canadian dollar rising almost 2.5 cents against it's competitor from south of the border. It's been rising slightly in par with increasing oil prices. Brent prices have increased this past week from Wednesday's $33.91 a barrel to today's $36.24 US.

*February production numbers show that most OPEC members are sticking by a self-imposed fix in output first proposed by member Saudi Arabia. Numbers show that the Saudi's are sticking pretty close to their January production of 10.2 million barrels a day in February as well. The exception here is with Iran, who produced more than 140,000 barrels a day more in February than in January, hitting 3 million barrels a day since sanctions were lifted.

The weak news on OPEC here is that production remained at a fairly strong 33.06 million barrels a day, down just 79,000 barrels from January figures.

That's enough for this week!

Any comments, feel free to leave them here, or drop me a note!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

From the markets: Worth watching

Speculators have got to be running on empty and on desperation!

Watching the oil markets this past week at least gave one some reasonable hope that, maybe...just maybe...consumers will be given some pause for low prices for gasoline this coming summer. Maybe we may be able to kick-start the economy by getting out and about and spend a few dollars while out on summer vacation...

Enter the start of the April buying contract...

Now, keep in mind that every year starting around March month, we usually see some sort of a move by speculators to put a few dollars on a bet that consumers will burn a little more gasoline during the summer than in any other time of the year...

Keep in mind too, that when they place their bets, it's usually hinged on the start of the US summer driving season, which as we all know in the markets has a traditional start of the US Memorial Day weekend. That usually falls on or about Canada's "May Two four" weekend.

So, with that "buying contract" for April opening officially yesterday, what did I see?...

A run-up in gasoline from about $1.05 US a gallon to yesterday's $1.31 US, an increase of twenty six cents US, or in Newfoundland and Labrador terms, an added 9.3 cents a litre...Plus taxes.

I'm keeping an eye to this to see if it sticks in the markets. At this point, it's just a "bet" that speculators are making that I'm hoping will burn them. Gasoline inventories are well up from last year's levels by almost 30 million barrels, making it a good bet that we may see more builds in gasoline inventories before the US summer driving season starts.

Right now, for the gouge that speculators are putting in the gasoline futures markets, I'm hoping that the latest US inventory data will burn them at their own game!

Fingers crossed on that one!

I'll have numbers for this week's price changes later tonight!

George

Price changes for Thursday, February 25, 2016

Hello everyone,

Here's what I have for this week, all in all, not too much off what I had last night.

Keep in mind the winter blend, which may throw off the numbers for heating and diesel fuel slightly...

*Heating oil shows a drop of 9/10ths of a cent a litre.

*Stove oil shows the same drop of 9/10ths of a cent.

*Diesel shows a drop of 1/10th of a cent a litre, and...

*Gasoline shows a drop of 1.5 cents a litre.

*Highlights

*The Canadian dollar gained a little more ground against its US counterpart, averaging another penny up over the last week against the greenback.

*A good build in gasoline inventories last Wednesday from the US Energy Information Administration is starting to show consumers some good signs on where potential pricing may be positioned come the summer driving season. With inventories still maintaining their builds, consumers may see the same prices that they are seeing now. Demand for gasoline remains weak and refinery capacity is also low as refiners head into their switchover from distillate production to gasoline. When capacity picks up, and that is expected over the next couple of weeks, it could add extra gasoline inventory to already positive numbers. Prices could potentially fall further!

*OPEC, Saudi Arabia can't seem to get it right...

In what must have been an almost embarrassing speech by the Saudi Arabian oil minister Ali Al Naimi, he professed today at a Houston oil conference that they had no intention of trying to knock out US shale production. But he also added that this may be a good cause for more expensive projects to shut down, or for investors to pull out of those same projects.

     Secondly, and probably more importantly, he also recognised the new reality that oil prices may never rebound to their previous highs of just two years ago when oil prices exceeded $100 US. They're not happy with oil where it is to now, but they may have no choice but to live with it. That's a signal to me that they're into the fight for their market-share for a long time.

I'll leave it at that for now!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

US Energy Information Administration report: Starting to get a "read" on summer

The latest report from the US Energy Information Administration released today gives a good indication where prices could be headed for consumers this summer.

According to the report, crude stocks have climbed again to reach a rough 504 million barrels on inventory on-hand, a record since record keeping began in 1981. Another 2.1 million barrels of crude oil was added to last week's numbers.

Gasoline inventories were also reported up this week by another 3 million barrels, and along with an increase in refiner capacity, figures show that in spite of the low price, consumers still seem to be holding back.
(See the summary here: http://ir.eia.gov/wpsr/wpsrsummary.pdf )

Why?

Well, maybe it's a sign that consumers are simply not paying as much attention to the pump price now that they're at a level that is more affordable. They simply don't have to go on a buying spree when they see prices reflected at a level that is affordable.

And maybe they are more aware and simply are practising conservation, which is great!

Perhaps the oil industry should take note the next time (if ever) that prices start to increase with rising oil.

What the report tells me simply is this: While gasoline and crude oil stocks are continuing to build, it is the middle of February. Traditionally, you would see gasoline speculators pouring into the markets well ahead of the summer driving season to try and take advantage of the opportunity to invest in anticipation of an increase in demand.

That hasn't started to happen. I'm wondering if it ever is going to...

Here's my read then for the summer, if this "trend" keeps up.

Simply put, "what you see is what you get"...At least so far...

With no sign of an increase in demand yet, consumers looking to plan their summer might be able to do something they haven't done in a few years: Go further!

Regards,

George

Price changes for Thursday, February 18, 2016

Hi to all,

Here's what I have for this week's price changes, keeping in mind "winter blending" which may throw off the numbers for heating oil and diesel fuel just a little.

*Heating oil shows a drop of just 8/10ths of a cent a litre....
Stove oil shows the same 8/10ths of a cent drop.
*Diesel fuel shows a drop of 4/10ths of a cent a litre, and...
*Gasoline shows a slight increase of just 3/10ths of a cent a litre.

Keep in mind that my margin for error is three tenths of a cent a litre outside of winter blending!

Highlights.

*The Canadian dollar remained relatively steady against the US greenback, averaging a rough $1.385 against the US buck over the last seven days.

*Markets are mostly in a waiting mode as they wait to see if any concerted action will be taken to institute production cuts between Russia, Venezuela and Saudi Arabia. Saudi Arabia and Russia are mostly responsible for added oil supplies worldwide.
   As a footnote to all this: The Saudi's, Russia, Venezuela and Qatar, all signatories to a deal that will stabilise production at January levels, say that Iraq and Iran must also curtail production if the agreement is to hold.

   Fat chance of that!

   Remarkable when you think about it, but world oil producers' concerns over added world crude stocks that is keeping crude oil prices at an extreme low are now talked about between major producers in the world's biggest case of "collusion" in an effort to help bolster prices again.
So much for the free market!

*Watch Brent prices in the coming few weeks.
News out of Iran sees that country sending it's first load of oil in four years to the European markets this week as Total SA out of France is seen to be buying off the now sanction-free country.
Iran, by the way, is not party to ongoing talks between Russia, Venezuela and Saudi Arabia over production cuts.

*A new brokered peace in Libya may also add more crude to the markets. With a peace deal in place with a new provisional government, it is possible that European markets will see added shipments from the North Africa country in the coming weeks as they seek to re-enter the market after an uneasy civil war.

That's it for this posting!

Regards,

George
Twitter @GeorgeMurphyOil

Price changes for Thursday, February 11, 2016

Good evening everyone,

Here's what I have for this week's price changes, keeping in mind winter blending that may throw off the heating oil and diesel numbers a little.

*Heating oil shows a drop of 1.3 cents a litre....
*Stove oils show down by 1.3 also.
*Diesel shows a half penny drop, and...
*Gasoline shows a huge drop of 4.7 cents a litre.

Highlights


*As predicted a few weeks ago, it certainly appears that a price war of sorts will start up against oil prices with most OPEC nations raising production in January month by an added 280 thousand barrels a month. Current production was a total of 32.6 million barrels a day. That hit Brent prices particularly hard today as most of this production would most likely be sent to the European markets. Keep reading...

*Still no real sign of a drop in US domestic production after a slight drop over the last six months. US domestic production in January remains at a  stalwart 9.2 million barrels a day. Pretty important signal to Saudi Arabia that they're going to have to drive prices lower, if they hope to knock out US domestic production as an important player in world oil prices. That, and compete directly with US customers for crude oil.

*The International Energy Agency is warning that low prices may continue for some time yet as all countries currently are producing 1.75 million barrels a day more than what the world actually needs. That's up another 250,000 barrels a day from their previous needs of world demand.

*Add to the mix, Kuwait as another country and OPEC member setting themselves up to produce more crude oil in the final quarter of 2016. They're set to increase production from 2.5 million barrels a day to 3.15 million by the end of the year.
Talk about exacerbating the problem!

*Finally, I'm surprised to hear that Nalcor will be looking for an increase to allowable expenses for added burning of oil in Holyrood! All things considered, prices for #6 oil that they use is now well below what they adjusted for months ago when we received a drop in electricity rates. Hopefully, the consumer advocate will defend this "ask" on the part of Nalcor and champion a drop in electrical rates as a result of the drop in price of the oil they use!

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyOil

Of market plays, reality and other oily bits...

Surprise!

You must be wondering exactly what goes through an oil speculator's head whenever we see what we've witnessed today in the oil markets. In spite of the breaking news the last couple of hours today, speculators still can't grasp the simple facts that lay before them that keeps them hedging their bets into a radically changed market.

It's simply not the same place since OPEC first played their lot in 1997. That was the year they wrenched production downwards in their effort to increase the price on a barrel. Succeed they did, but only to have others to explore with different tools into long-known shale resources that they thought would never be tapped.

How wrong they were when the advent of slickwater did them in starting in 2008! The markets simply haven't been the same since.

But today's market news simply tells the state of the speculator, playing with God only knows who's money, but playing with it nonetheless.

If you're Stateside, you're 401K is taking a beating.

So, here traders were, from last Friday, dealing with "news" that Russia and Saudi Arabia were into some sort of talks on a concerted market action to raise prices, because you know, every time your country goes to war, you have to have a way of paying for it. So, you don't say "no" to the course of action.

Oil rises as a result of said "talks on a production cut". Both countries neither confirm, nor deny...

Iran enters and puts the kibosh on those talks late Friday and the electronic sell-off into Monday and Tuesday squares away the reality again. All is in balance...

Then today...

In spite of the latest US Energy Information Administration's report, and the promise held within of the market reality of declining storage, excess supply and slack demand for refined products and a world awash in crude oil, prices increase markedly...

Why?...

That "nasty" rumour of OPEC master Saudi Arabia and Russia talking again.

No confirmation.

No denial.

Oil rises...

But it's your investments! You expect a "return" because that's for retirement and returns are supposed to happen, right?...

Deal with reality. EIA results showing 503 million barrels in storage, a record high not seen in eighty years!

Gasoline inventories up another 5.9 million barrels, well ahead of the summer driving season when the speculators start to turn their attention to a peak in gasoline demand, all in spite of refinery capacity down to a low of 86.6 per cent!

Consumers simply aren't burning the stuff, and depending what side of the ecological fence you're on, that's either a good or bad thing. Yes, Mr. Speculator, you're really starting to run out of places to put the oily bits down on. Seems with oil, it's both out of luck and out of time.

Take some worthy advice.

"Put your bucks into alternative energies and let it ride..."

*******************

George

Twitter @GeorgeMurphyOIl

Price changes for Thursday, February 4, 2016

Good evening!

Here’s what I have for this week’s price changes. Please keep in mind that the numbers for Heating oil and Diesel fuel are subject to winter blending and may be off somewhat. Use them as a rough indicator of direction!

*Heating oil shows an added 3.6 cents a litre.

*Stove oil shows the same 3.6 cents a litre.

*Diesel shows an added 3.4 cents a litre, and...

*Gasoline shows an added 6/10ths of a cent a litre.

Market highlights

Canadian dollar steady

*While oil gained some strength over the session, rising to touch close to $36 US for Brent, the Canadian dollar rose right along with it. Averaging close to $145 last week, the dollar gained almost five cents against the US dollar, but did not retreat with the last couple of days trading, staying at a steady $1.40 against the greenback.

US inventories

*While US inventories of crude oil, gasoline both increased last week, prices for distillates like heating, stove oils and Diesel fuel all decreased with colder weather in the US northeast and Mid-west. Inventories were nailed with a loss of 4.1 million barrels, showing good demand for the products, and that’s where speculators poured it on. Crude oil added an additional 8.4 million barrels while gasoline was up another 3.5 million.

            Refiner capacity dropped to 87.4% from the 90.6% recorded the week previously due to unscheduled refinery outages.

Marine Atlantic surcharges

*Any increase to surcharges to Marine Atlantic customers should be totally unacceptable for anyone in this province. While not directly fuel related, any future increases to fuel surcharges are coming, according to the federal corporation. Representation from this province should be made to prevent any increases that supported the former government’s policy of making the crown corporation a “self-sustaining” entity. The policy of any government should be to connect a country, not bar anyone from entry or exiting from that province. “Any increase in rates adds to an artificial inflationary cost that is passed to consumers” and should be absorbed by the federal government.

            Secondly: The boats we have now were first purchased as a replacement to the old “Caribou” and “Joseph and Clara Smallwood” boats, not only because of twenty year replacement, but because of their fuel efficiency. While there hasn’t been any marginal decrease in marine diesel prices, it is wrong to assume that consumers and users of the ferry system will have to pay higher costs due to higher prices for the fuel in the future. Already, there is a glut in shipping worldwide, so much so that fuels, like marine diesel fuels, are expected to retreat in the face of less consumables being transported.

           Lastly: If there’s any improvement in the Canadian dollar, then consumers should be, not only expecting, but demanding a break to fuel surcharges because of the same lower cost of fuel acquisition. The price of fuel, right now, between 2014 and 2016, when we were close to par and today’s dollar, both show that we essentially are paying the same price for fuel.

            Either way, absorb the cost. It’s the price of doing the country’s business!

Watching: US inventories, gasoline inventories, Iran production, Saudi-Russia arrangements, OPEC production figures.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOIl

Enter the Dragon

           The latest US Energy Information Administration's inventory data is very telling on where the market stands and how traders are having trouble trying to justify any increase in oil prices for the foreseeable future.

            Consider the last three weeks of inventory data released by the EIA. For the past three weeks, data tells us that, in spite of recent drops in refiner capacity and utilization, crude inventories have been showing pretty robust builds in what some even say are in the face of dropping US domestic production.

            Well, the oil is coming from somewhere, isn't it?...

             US domestic production still hasn't shown a solid drop in production and output since the last figures we saw in December. Current production rests somewhere in the 9.2 million barrel per day range. No doubt, some small-time producers are having some troubles, but it's my belief that these same small-time producers have no choice but to pump to pay off their investors. They simply can't shut down...

             It's best for them to risk bankruptcy than to shut down and risk losing any hope of gaining back investors if oil prices rebound. Keep pumping and hoping...

             Elsewhere, Saudi Arabia chatter is that they're in talks with Russia over the possibility of production cuts that may only be a pipe dream. The truth is for the Saudi's is that they simply can't cut back production without losing market-share to neighbouring Iran, who some time ago, promised to get back their market-share lost to the Saudi's when sanctions were first placed on them years ago. Their "re-entry" into the oil markets has the Saudi's on notice that there will be a price war. 

             Secondly, with the prospect of Iran pumping more, why would the Russians risk losing their own market-share to the Iranians?

             Reality bites...

             Three weeks in a row now, the EIA has reported more than 20.8 million extra barrels of crude oil into the US markets. Space to store it is beginning to disappear at a prodigious rate and consumers simply aren't burning gasoline like they used to. With inventory builds ranging 16.5 million barrels ahead of the build-up to the summer driving season, why would I risk putting money into a so-called "bottom" to oil prices?

             Finally, enter the dragon called China. With weakening manufacturing data, low demand growth and an overall faltering economy, where again is the impetus for oil? Prices are low worldwide, but no one is buying.

             God help the markets if China decides to stop their investment and top-up of their strategic reserve! You can look for an immediate availability of 500,000 barrels a day if they stop their program of building it. The ramifications of that could be felt soon enough! But is this the response we're waiting for from China? Are they the factor we're all waiting for to see what a fair world price of oil should be...or could be?

             Is our own economy waiting for China alone?

             So, what do we look for? Any hope of rising oil?

             The market hope rests in one fact, a point that Saudi Arabia may have been forcing on us in the first place: Why pump in the west if you don't have to? Strategic drilling and the forced shut-down of projects and exploration may be the only hope, as fleeting as they may be, that world production itself gets a hit merely on affordability of projects already started but not as yet producing.

              The new dragon in the markets may simply be found in the wheat and corn husk fields ranging between the Dakota's and the Texas Oklahoma panhandles. Simple ability to respond to any crisis, or downfall in world production could be as easy as turning the spigot Stateside.

              Even then, that response can be short-lived!

Regards,

George

Twitter: @GeorgeMurphyOil  

            

 

Price changes for Thursday, January 28, 2016

Hi to all,

First off, thanks for your patience as I have not posted here in some time due to computer issues. I needed a solid upgrade, let's put it at that!

Either way, now that I am free and unencumbered, I intend to post here a little more often than previous as changes to the oil markets occur. You can count on hearing from me a little more as we go through this downturn and changes to the oil markets!

If I bore you, then unsubscribe!...lol

Here’s what I have for this Thursday’s price changes. Keep in mind that due to the winter blend of fuels, heating and Diesel numbers may be off slightly.

*Heating and stove oils show an added 18/100ths of a cent up.

*Diesel fuel shows an added 7/10ths of a cent upwards, and...

*Gasoline shows an increase of 5/10ths upwards.

Market highlights

*The Canadian dollar is starting to gain some ground against its US counterpart, reaching $1.4062 against $1.4589 at the start of this pricing session. In spite of the rise in fuel prices on the New York mercantile exchange this week, those increases have been mitigated by the rise in the Canadian dollar. Heating oil increased a rough nine cents a US gallon this last week on the exchange, while diesel gained a dime a gallon and gasoline increased six cents on average this past week on rising oil.

*All eyes are now on Iran for the first data that may show exactly how much oil the OPEC member will be pumping into the markets now that sanctions have been formally lifted. Iran will immediately respond by adding 500,000 barrels to output, gradually increasing to an added million on top of present output by the end of this year. Look for a “play” as Iran counters lost market share to competitor Saudi Arabia.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil