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