Price changes for Thursday, August 27th, 2020

Hi to all,

 

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

 

*Heating and stove oils show a drop of 6/10ths of a cent per litre.

*Diesel shows a drop of 5/10ths, and...

*Gasoline shows an increase of 2.4 cents a litre.

 

Market highlights

 

Hurricane Laura drives prices

While prices are not moving by a large amount this week, at least for gasoline, the number is more significant than it has been in some time with prices up sharply over the last two days.

     The reason is showing up in the Gulf of Mexico with at least 1.2 million barrels of oil production shut in in the Gulf, and hurricane warnings now posted for an area of the Texas/Louisiana border known for its refining capacity, offloading and pipeline transport of refined products to eastern and northeastern markets.

     In 2005, Hurricanes Rita and Katrina brought disaster to the industry and consumers with elevated prices due to the disruptions in supplies that the storms brought, with a situation where particularly gasoline prices ran out of control in some areas of the country.

     If memory serves, almost 4.8 million barrels a day of refining capacity was put offline for about two weeks, causing skyrocketing gasoline pricing.

     108 oil producing facilities and platforms were destroyed by Rita and Katrina outside of refining infrastructure, whereas no destruction of facilities offshore has occurred as of yet, although 1.2 million barrels of oil production is offline.

     Prices in Canada hit $2.20 a litre in Ontario and a then record $1.53 a litre in the immediate St. John’s area before moderating somewhat two weeks later, but only after some oil infrastructure came back online.

    Some differences between then and now worth noting however, as Rita and Katrina were both category 5 storms and Laura is category 3 as it hits the coast on the Texas/Louisiana border sometime Wednesday.

 

     **Numbers heading into next week are already showing 3 + cents up a litre at release time, that could affect next week’s pricing. However, positive news on oil infrastructure damage after the storm passes may negate this and show dropping prices.

 

Libya peace agreement?

Factions in Libya have reached a peace agreement that could add up to 1.5 million barrels a day to the world oil markets if it holds.

     Also an OPEC country, the agreement may force OPEC to take a second look at overall production at its next meeting as Libya was not included in the initial agreement on cuts made several months ago.

     Libyan exports mainly are exported to European destinations, but some does come into North American markets from time to time.

 

That’s it for this week!

 

Regards,

 George Murphy

Twitter @GeorgeMurphyOil 

Price changes for Thursday, August 20th, 2020

Hi to all,

 

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

 

*Heating, stove oil and Diesel all show a drop of 1/10^th of a cent a litre.

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

 

Market highlights

 

OPEC meets Wednesday

OPEC will meet again Wednesday in a meeting to revisit cuts imposed on world markets and to reassess how those cuts have impacted the markets.

     The meeting is being watched closely by some speculators for any signs that might point the future prospects of crude. Crude oil, while up slightly with imposed cuts, has not gained any real value as was expected in the face of weak demand during the Covid-19 crisis. If the news from OPEC is seen as flat, then a correction in prices may possibly happen as any negative outlook on prices will affect speculators.

     Meanwhile, the International Energy Agency and OPEC are still saying that demand for this year will be down anywhere between 8.1 and 9.3 million barrels a day as a result of Covid-19 and the world economy.

 

US inventory data

US crude oil inventories were down again in last Wednesday’s inventory report, this time by 4.5 million barrels.

     Gasoline dropped 700,000 barrels, while distillates also lost 2.3 million barrels on 81 percent refiner capacity.

     Interesting to note that US domestic production also dropped by 300,000 barrels bringing US domestic production down to 10.7 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil   

Price changes for Thursday, August 13th, 2020

 

Hi to all,

 

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

*Heating and stove oil to increase by 2/10ths of a cent a litre.

*Diesel fuel shows no changes, and...

*Gasoline shows an increase of just 4/10ths of a cent a litre.

 

Market highlights

Companies buying back oil?

You heard it right.

    During the April storage crisis when prices plunged for West Texas Intermediate, oil companies rented space from the United States strategic reserve. At the time, the companies were successful in getting oil into storage to the tune of 23 million barrels into the Louisiana and Texas old salt mines that were long used for storage in the strategic reserve.

     They had space rented there on the condition they would have it removed again by March 2021.

      Yesterday, it was confirmed by CNBC that seven companies have begun to remove the oil and place it back into regular inventory. The start of the removal process has seen about 2.2 million barrels removed and placed into regular inventory, offsetting some drawdown of stocks that we have seen the past couple of weeks.

       It still leaves a problem of that 20 million barrels that could sway prices. 

US dollar lower spurs oil

Anytime you see a slippage in the US dollar, it’s not unusual to see an increase in oil prices, or any other commodity.

     It has been one of those weeks!...

     Gold climbed well above $2000 a ounce on rising unemployment levels in the US as did oil, but retreated somewhat as some sentiment over growing US employment data as well as rising Covid-19 cases saw gold skyrocket.

     Oil pared any further increases as a result of flattening summer demand. 

US inventory data

The latest Energy Information Administration data is out.

     US crude inventories were down by 7.4 million barrels, while gasoline inventories were up a modest 420,000 barrels on the week.

     Distillate inventories were also up by 1.6 million barrels on 79.6 percent refiner capacity.

     US domestic production was steady at 11 million barrels a day.

     In the meantime, the Baker Hughes rig count was down another four rigs to 247, while 983 were working the same timeframe last year.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, August 6th, 2020

Hi to all,

 

Here’s what I have for price changes for this Thursday, August 6^th, 2020...

 

*Heating, stove oil and Diesel all show a drop of 1.1 cents a litre, and...

*Gasoline shows a drop of 3 cents a litre.

 

Market highlights

 

Covid continues to choke demand

Just when they thought it was safe to go back to their drill bits...

    News of any potential increase in oil prices continues to be tempered by continuing outbreaks of Covid-19 worldwide, especially in the United States as Covid-19 seems to be a huge factor in any economic recovery.

    Word of several outbreaks in Australia, Germany, Spain and the US continues to keep a hold of any meteoric rise in oil prices and demand for most distillates as well as gasoline, has been flattened.

     And with the end of summer coming quick, further drops in demand for transportation fuels, including gasoline, is highly likely.

 

Early winter outlook

With the summer drawing to a close for some, bets on gasoline by speculators usually switches to distillates, like heating oil as the fall and winter seasons contracts approach.

     The colder the weather, the more demand for distillates.

    A look at the data shows heating and stove oil spot prices a rather tidy 13 cents a litre lower than the same timeframe for last year, and if oil prices remaining relatively flat over the next few months, then consumers can expect to pay up to 79 cents a litre, down from the 92.9 they paid at peak winter pricing last year in the immediate St. John’s area.

     However, with Covid-19 holding the possibility of further shutdowns in the future that may keep everyone close to home, demand may increase to close that gap between this year and last year’s pricing.

     I’ll continue to keep an eye to it all!

 

US inventory data

The Energy Information Administration’s latest inventory data is out, and it shows a drop of 10.6 million barrels, leaving inventories of crude a full 17 percent above last years levels.

     Gasoline showed an increase of 700,000 barrels, while distillates were also reported up slightly, but by 500,000 barrels.

     Refiner capacity was recorded at 79.5 percent.

     US domestic production remained steady at 11.1 million barrels a day.

     The Baker-Hughes rig count remained at 251 operating rigs, but down from the 946 that were operating at the same time last year, a drop of close to 75 percent.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 30th, 2020

Hi to all,

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

*Heating and stove oils to increase by 4/10ths of a cent/Litre.

*Diesel shows an increase of 3/10ths of a cent a litre, and...

*Gasoline shows an increase of 1.1 cents a litre.

Market Highlights

Rise in Covid counters any price increases

The news this past few days has been centered around the rise in Covid-19 cases worldwide as Covid fatigue has sparked a new round of cases that has speculators worrying over the effect on demand for refined product.

     With new cases rising in Spain and Australia, besides what’s been happening in the US, concerns for any further increase in crude prices remain in doubt as demand is seen to be hit.

    Oil prices have been mostly steady with refined product prices remaining where they have been over the past three weeks now as Covid numbers have been rising steady in recent weeks.

US EIA inventory data

US crude oil inventories increased up to the week of July 17^th, adding 4.9 million barrels to present stocks.

     Gasoline inventories dropped by 1.8 million barrels, while distillates increased by 1.1 million barrels.

     Refiner capacity was recorded at 77.9 percent.

     Meanwhile, also buried deep in the data, some reason why I think prices will remain fairly steady at $40 to $43 US for Brent for the time being.

     The same inventory report for last week also showed an important increase in US domestic production, which increased 100,000 barrels, rising from 11 million barrels a day to 11.1 million barrels.

     If this is any important notification, then it shows that according to the timeline, US shale drillers can survive at $38 US, and some spigots are quick to turn back on to take advantage of rising oil prices.

     Also, after a long series of drops in overall US rig counts, the report for last week from Baker Hughes, showed an increase of but ONE rig getting back to work in the oil patch. If that trend upwards shows this next week, then expect there to be some spark to keep it playing in the oil markets to mitigate any further increase in Crude oil.

Canadian dollar gains ground

The Canadian dollar has increased in recent days, rising from $1.36 Canadian against the greenback on July 16^th, to today’s $1.337 Tuesday noon.

     The increase in the dollar has mitigated further any increases for the week as a higher dollar tends to benefit Canadian consumers against US prices.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 23rd, 2020

Hi to all,

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

*Heating and stove oil to drop by 1/10^th of a cent a litre.

*Diesel shows no change in price, and...

*Gasoline shows a drop of 1.5 cents a litre.

Market highlights

Corona vaccine holds promise for higher oil

With oil prices hanging around $40 US a barrel, and slightly higher for Brent, word of a possible break in the search for a vaccine for the Corona virus sent oil prices higher today as optimism around a possible rebound in oil demand came with the prospects of a cure.

     Word comes from Oxford University in England over the possible vaccine.

     Anticipated demand would rise as the treatment for the virus would re-open economies worldwide, and demand for oil  and refined products would increase along with it.

China purchases down sharply

Last month, I told you all about a huge increase in purchases of oil by Chinese oil companies that helped to increase prices to present levels.

     Now comes the downside...

     Latest figures seem to indicate that China has cut back purchases of oil off the open markets as late as May with that month’s import figures showing a 22 percent drop in imports into the Asian country.

     One of two things here that may be affecting purchases: either storage is just about filled up, or secondly, even though they may have been refining it, there seems to be no markets for the refined product as Covid-19 still reigns worldwide-for now.

Eyes to the markets

With oil rising, and the prospects for a cure driving the latest round of price increases, shale producers may be starting to think about turning the taps back on to recoup losses from the extended shutdown due to Covid-19 and the economic closure brought along by it.

     The break-even point appears to be close to $40 WTI for shalers as the numbers of rigs being taken offline has decreased sharply. Only two rigs came offline last week.

      It may be time to watch US domestic figures as well that were just 1.3 million barrels a day less than what was produced for the same time last year, being 12.3 million barrels a day last July.

US EIA inventories

The latest EIA inventory report shows a 7.5 million barrel draw in crude oil inventories, while gasoline supplies also dropped 3.1 million barrels.

     Distillates were also down by 453 thousand barrels.

     Refiner capacity was recorded at 78.1 percent.

     US domestic output was recorded at 11 million barrels a day.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 16th, 2020

Hi to all,

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

*Heating, stove oil and Diesel all show no changes to prices this week.

*Gasoline shows an increase of 8/10ths of a cent a litre.

Market highlights

OPEC meets this week

OPEC members will meet again tomorrow to discuss a partial lifting of cuts that are scheduled to be lifted as some countries economies open up again.

     OPEC cuts were supposed to ease somewhat at the start of August, going from 9.7 million barrels a day to 7.7 million barrels a day. The move is anticipated as OPEC does not want to cause any alarming fall in the price of crude, nor does it want to cause any harm to any economic recovery that may be underway.

     At the same time, OPEC members need the revenue, so there is still support for prices to be sustained over $40 US a barrel to help top up lost revenues.

     Meanwhile, new data from OPEC is showing there was stronger than usual compliance with production cuts in June month with numbers showing OPEC members actually cut 10.5 million barrels a day, well over the 9.7 million members had agreed to.

Chinese storage drying up quickly

Those readers of the update will recall just two weeks ago that I reported that data out of China indicated they were buying low and filling strategic reserves. Further to this, tanker traffic has become backlogged with unloading not going off as planned, another strong indicator of just how fast Chinese storage capacity has filled up.

      Information at that time showed China buying more than two million barrels a day more than what consumption figures were showing, ironically a figure being discussed by OPEC as the total they will throw into the markets.

      If Chinese storage does fill up, and offloading ceases in Asia, the  we may have another problem starting where, in addition to a partial lifting of cuts, plus waning China purchases, could put 4 million barrels of crude a day back onto the oil markets again.

US inventory data

The latest US EIA inventory data is out, and crude oil added 5.7 million barrels of crude to US supplies.

     Gasoline dropped 4.8 million barrels, while distillates added 3.1 million barrels on 77.5 percent refiner capacity.

     US domestic production was reported at 11 million barrels a day for the third week in a row, indicating a steady output with prices averaging $40 US a barrel.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 9th, 2020

Hi to all,

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

*Heating and stove oils to increase by 2.7 cents a litre.

*Diesel shows an increase of 2.9 cents a litre, and...

*Gasoline shows an increase of 3 cents a litre.

Market highlights

OPEC production drops again

OPEC production figures are out and, once again there are signs of strong compliance amongst OPEC members.

     Total OPEC production was measured at 22.6 million barrels a day in June, down a good 9.5 million barrels per day after OPEC and OPEC+ members agreed to cuts just two months ago.

     Saudi Arabian production was recorded at 7.53 million barrels a day for the same month.

      Venezuela production, by comparison, was just 360,000 barrels a day.

     Overall, OPEC production is down to levels not seen since the 1991 Gulf War.

Gasoline demand on shaky ground?

While gasoline may be pointing up this week, some signs are starting to appear that may start to point gasoline prices down again.

     With rising cases of Covid-19 starting re-emerge in the US with the opening of the economy, along with holiday and summer get-togethers, gasoline demand is seen to be taking a hit in the coming days and weeks as hospitalisations and stay at home orders start taking effect again as some areas shut down again.

     Areas like Florida, Arizona and California have rising cases in recent days that are leading to second shutdowns of local economies.

EIA inventories

The latest inventory data is out, and crude oil continues to show further drops in stocks with crude dropping 7.2 million barrels.

     Gasoline inventories gained 1.2 million barrels, while distillates dropped 600,000 barrels.

     US domestic production was reported at 11 million barrels a day, no change from the week previous as it seems increased oil prices has given some support to shale producers.

     Refiner capacity was reported at 75.5 percent.

     Meanwhile, the Baker Hughes rig count shows 263 rigs operating in oil and gas fields south of the border, down an even 700 rigs for the same time period last year.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 2, 2020

Hi to all,

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

*Heating and stove oil to drop 1.8 cents a litre.

*Diesel showing a drop of 2 cents a litre, and...

*Gasoline to drop by 3.5 cents a litre.

Market highlights

Covid-19 announces its presence

For those south of the border who thought it was safe to open the economy again, we have news for you.

     Covid-19 wasn’t going away.

     Numbers of cases of the disease started to increase again in areas such as Arizona, California and Florida at a time when they thought it was safe to open a short time ago.

     Early openings have helped to spread the disease, and doubts about increasing demand of fuels riding on those hopes soon were dashed with both oil and refined commodities beating a retreat that might not stop if Anthony Fauci is right.

    Fauci, the US’s top doc and Covid-19 handler, projects as many as 100,000 extra cases of Covid-19 to wave over the US if measures to stop the disease soon aren’t taken in at least 32 US states.

    The possibility of a demand crash, at least in the US, will temper any gains made with oil. European Union countries have gained some semblance of control over the disease, so that might temper any drop in oil.

US inventories

The Energy Information Administration’s latest read on inventories is out, showing a gain in crude inventories of 1.4 million barrels.

      Gasoline stocks were down by 1.7 million and distillates up by 249 thousand barrels.

      Refiner capacity was reported up to 74.6 percent of capacity, a slight increase from the week previous.

      US domestic production was reported at 11 million barrels a day, an increase of 500 thousand barrels, and 1.1 million barrels lower than for the same timeframe last year.

Start watching your electricity bill

It will hit sometime this month...

     Last year, when I questioned Nalcor’s oil price estimates for electrical generation of $106 a barrel Canadian, I never did get an answer and suggested that it would be way off and that Nalcor should revisit the increase to electrical consumers based on the well-off estimates.

     I was proven right.

     The present government saw fit to have Nalcor revisit those numbers, lowering oil prices for electrical generation down to average $51 a barrel instead. The balance will be returned to consumers in the form of a one-time rebate in July/August.

    The amount everyone receives back as a credit will be based on overall electrical consumption.

    Again, being July, I am again looking forward to find out what Nalcor’s estimates for the price of oil for electrical generation will be in their “application” to the Public Utilities Board, but I will again question the estimates they come up with.

    Present day prices are hanging around $55 a barrel Canadian.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, June 25th, 2020

Hi to all,



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



*Heating and stove oil to increase by 3 cents a litre.

*Diesel fuel shows a 3.3 cent a litre increase, and...

*Gasoline shows an increase of 4.9 cents a litre.



Market highlights



OPEC+ cuts start to bite

OPEC is finally getting serious about production cuts with member compliance reaching 88 percent during the month of May. That’s a stark change in the data that showed most member nations were doing much less on compliance.

      The latest numbers will be used to inform OPEC’s Joint Ministerial Monitoring Committee which now oversees OPEC members and their compliance at their next meeting July 15^th to gauge how much more to cut from production, if anything.



Canada getting hit hard

Over 1.1 million barrels of crude output has been shut in since the collapse in crude prices according to Oilprice.com. The story says Canada’s output of 3.5 million barrels a day in 2019 has taken a hit mainly from train exports in Alberta where crude oil shipments have dropped from 450 thousand barrels a day to just a shade over 150 thousand per day.

    The hard shutdown is also responsible for capacity issues in the pipeline export system with there being “plenty of room” for the export of crude oil to southern or western markets.



US inventory data

US crude oil inventories were recorded up marginally by 1.2 million barrels over the past week, while gasoline inventories were down on increased demand by 1.7 million barrels.

     Distillates were also down, but by 1.4 million barrels.

     Refiner capacity was measured at 73.8 percent.

     US domestic out put took another downwards hit, losing another 600,000 barrels a day of production to sit at 10.5 million barrels a day from the January high of 13.5 million barrels.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, June 18th, 2020

Hi to all,



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



*Heating and stove oil to increase by 6/10ths of a cent/litre

*Diesel to increase by 7/10ths of a cent/Litre, and...

*Gasoline to drop by 1.2 cents a litre.



Market highlights



Oil rises

Oil prices faltered, sputtered and then recovered losses over this past week as a second feared wave of Covid-19 was seen to start as cases in Florida and Arizona appeared to rapidly increase two weeks after the start of the US Memorial Day weekend.

     Oil then began a rise later in this session as China was seen to be building strategic reserves over the last five months as they were successful in acquiring cheap oil to the tune of 440 million barrels, helping to support prices.

     China is not only hoping to put some oil away in reserve, but they are hoping with the rise in prices to release some from the reserve and take advantage of selling at a higher price.

      With cautious optimism however, as previous numbers were believed to be a signal of increasing industrial recovery.



Strategic oil reserve? In Canada?

     Years ago, there was heavy talk of the United States expanding its strategic reserve of oil, that is oil in storage, to help protect the supply of oil in the event of any kind of national emergency.

     The plan was to use Bell Island’s old mines for such a purpose quickly fell through as the United States wouldn’t have any part of its reserve outside the country.

     But why doesn’t Canada have one-but for a different purpose?

     While not a new idea, the problems of having a world storage issue along with an over-production problem, has led to the collapse in the price of oil. However, if Canada set up a reserve, it could buy oil at the low price, then release it again as oil prices recovered, thus helping oil companies weather any downturn in price, or at least, help avoid one.

      While the reserve, or the storage, would help offset falling prices, it has a strong ability to support oil, and thus , preserve the state of any royalties the provinces would see from their resources. As far as I know, besides the “on land” tank farm, we don’t have that capability like the US or china, the US with close to 800 million in their reserve and China with a capacity of 684 million barrels.



US rig counts stabilizing?

While US domestic production has been dropping since the start of the pandemic, from 13.4 million barrels to 11.2 million, rig counts have also dropped from 984 rigs to Friday’s 279 rigs, a drop of just 6 rigs.

     The week previous saw a drop of 17 rigs down to 284.

     Worth watching, and with oil prices showing some small signs of recovery, is the US shale industry getting set for a possible turnaround as prices rise?



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, June 11th, 2020

Hi to all,



First off, I have no media availability tomorrow morning. Sorry!



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



*Heating and stove oils show an increase of 3.6 cents a litre.

*Diesel fuel shows an increase of 4.6 cents a litre, and...

*Gasoline shows an increase of 4.7 cents a litre.



Market highlights



OPEC+ extends cut agreement

OPEC and non-OPEC producers like Russia reached an agreement to extend cuts past the June deadline, adding another month to the cuts agreement reached a short two months ago.

      But there remains a problem of oversupply remaining in the markets that some are speculating is still a billion barrels over world needs. OPEC and non-OPEC cuts at close to 10 million barrels a day can only account for 300 million in June month, and oil prices rising slightly have drillers in US shale regions thinking it may be time to return to the oil patch.

      US drillers may not have been taken out of the markets as much as OPEC had thought

      While oil prices increased after the agreement was reached, they didn’t hit levels that some thought would signal a significant impact on oil inventories.

       And while a US jobs report showed some optimism of increased economic activity, there’s still the spectre of Covid-19 hanging over the markets.



First real tropical storm in the Gulf takes some production offline

Tropical storm Cristobal hit the coast of Louisiana on Sunday bringing heavy rain and some flooding.

     The storm also took about 660,000 barrels a day of production offline, bringing in a temporary rise in oil prices due to the short-term disruption.



US EIA inventories

The latest report from the Energy Information Administration shows that crude supplies dropped by 2.1 million barrels as US domestic production also dropped to 11.2 million barrels a day.

     Refiner capacity was recorded at 71.8 percent.

     Gasoline inventories increased by 2.8 million barrels and distillates were up sharply by 9.9 million barrels as some distillate users like airlines remain on the ground.

     Meanwhile the Baker Hughes rig count was down another 17 rigs to 284 from 984 rigs at the same timeframe for last year.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, June 4th, 2020

Hi to all,



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



*Heating and stove oil to drop by 2/10ths of a cent per litre.

*Diesel fuel to drop by 3/10ths of a cent per litre, and...

*Gasoline to drop by 4/10ths of a cent per litre.



Market highlights



OPEC meets again Thursday

OPEC will have a special meeting to further discuss a longer timeframe for production cuts Implimented just about a month ago.

     Oil prices had been increasing as a result of the cuts and a return of some demand as economies get back to work.

     However, the latest survey seems to indicate that OPEC has failed to meet it’s own production cuts only meeting about 70 percent of the agreed-upon 9.7 million barrel a day total production cut.

     According to Oilprice.com, Nigeria and Iraq are both seen as being two OPEC members who failed to meet the goal with Iraq meeting just under 40 percent of the ask of that country.

     Russia, in the meantime, is looking at an end to production cuts at the end of June, in stark disagreement with Saudi Arabia who are looking to extend the production cut agreement.



US EIA inventories

The latest inventory report from the Energy Information Administration is out, a day later because of the US Memorial Day holiday.

     Crude supplies increased by 7.9 million barrels, while gasoline showed a modest drop of 700,000 barrels.

     Distillate inventories were up by 5.5 million barrels.

     Refiner capacity was up this week to 71.3 percent, while US domestic production was recorded at 11.4 million barrels a day, down another 100,000 barrels.

     Refined gasoline supplied to the US markets was recorded at 7.25 million barrels against 9.39 million barrels a day for the same time period last year, down close to 2.1 million barrels.



   **Oddly, while oil stocks have been dropping in Cushing, Oklahoma, giving some support for WTI prices, has anyone noticed that stocks in PADD’s 3, 4 and 5 have been increasing in the last few weeks? It’s my contention that they have been diverting inventory rather than seeing a more pronounced drop in production.



Canadian dollar rises

Anytime we see a rise in the Canadian dollar against the US greenback, some effect is had against fuel spot prices. This week is no different as the sharp rise in the dollar has resulted in consumers seeing a drop in prices while actual spot prices for refined product have also risen right along with them.

     Since May 22^nd, the Canadian dollar has gained a full nickel saving consumers a rough 4 to five cent a litre increase across the board for refined products.



Rig counts down further

US drilling rigs in the field were down another 17 rigs according to last week’s Baker Hughes rig count, and down 683 rigs from the same timeframe last year.

     While rigs exploring and drilling may be down, that doesn’t mean that production of oil has dropped at the same rate as indicated by the numbers of rigs offline.

      Key US domestic production figures need to be watched closely as does the rig count as some producers may return to the field as oil prices rise again.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 28th, 2020

Hi to all,



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



*Heating and stove oil to increase by 2.1 cents a litre.

*Diesel fuel to increase by 1.9 cents a litre, and...

*Gasoline to increase by 2.8 cents a litre.



Market highlights



Oil rises on economy

Oil prices continued to increase this week on an optimistic outlook that the economy in the US will bounce back.

     Demand for gasoline also increased along with other refined commodities, as the traditional start to the summer driving season is now underway, increasing spot prices another 2.8 cents over the last week.

     It’s usually just after this session every year that we see a slow retreat in refined prices, at least until the first major storm hits from hurricane season, usually at the end of July.

     Of course, complicating all this remains the prospect of Covid-19 that still remains a factor in demand.



US rig counts drop again

How telling is the shutdown of oil production?

     If the US rig count is any indication, according to Baker Hughes, another 21 rigs were offline over the last week, bringing the overall rig count down to 237 operating rigs south of the border. To put that number in context, this time last year saw 983 rigs in the field.



US inventories down again

US crude oil inventories were recorded down again this week as 5 million barrels was drawn from overall oil stocks.

     Gasoline inventories added 2.8 million barrels, while distillate added 3.8 million barrels.

      US refiner capacity was recorded at 69.4 percent.

      US domestic output was recorded at 11.5 million barrels a day, 1.8 million barrels lower than peak production in February.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil