Price changes for Thursday, June 3rd, 2021

 

Hi to all,

 

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

 

*Heating, stove oil and Diesel all show an increase of 1.8 cents a litre.

*Gasoline shows an increase of 2.3 cents a litre.

 

Market highlights

 

OPEC leaves production untouched

OPEC and OPEC+ members met in Vienna, Austria today to discuss any changes in market conditions that would have led to changes in production, but all members agreed to leave in place added production to the markets that started at the beginning of May.

     Members also agreed to maintain levels agreed to in June, and also to add further production in July.

     The next regular meeting of OPEC and OPEC+ members has been set for the first week in July with all members revisiting the issue of releasing more crude to the marketplace as demand for oil continues to rise.

 

US summer driving season is underway

With strong gasoline demand underpinning prices, consumers south of the border are taking to the roads in  droves as the US Memorial Day weekend signalled higher demand-and prices-to consumers who are venturing down the road.

     Last week’s EIA inventory report showed gasoline supplied to the markets hitting almost 9.4 million barrels of gasoline a day, with US inventories also showing a draw of 1.7 million barrels, a telling signal on a return to near normal demand as vaccinations continue to thwart any possible slowdown in demand.

     The same timeframe from last year showed almost 7.2 million barrels a day in gasoline was supplied to a covid shutdown market where demand took a huge hit.

     Demand for jet fuels also was on the rise with US inventories showing a drop of three million barrels for the week as travelers ventured out for the first time on holiday.

     According to the inventory report, refiner capacity also increased slightly to meet demand, reaching a high for the year of 87 percent.

 

US-Iran nuclear deal talks still underway

According to Iranian officials, some details of the new nuclear deal remain to be cleared up before Iran can head back into the oil markets.

     Iranian officials say that because of complications as a result of Trump backing out of the deal three years ago, President Biden would return to the nuclear bargaining table if Tehran starts to comply with strict limits put on uranium enrichment and inspections through the International Atomic Energy Agency (IAEA).

     France, a signatory to the deal, had concerns over traces of uranium found at undeclared nuclear sites, and that remains an issue before any deal is signed.

     If the deal is signed, oil prices could take a hit as Iran has a massive inventory of crude ready to ship to market, and have stated they would boost exports from 2.5 million barrels a day to almost 4.5 million a day with a goal to produce upwards of 6.5 million long term.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 27th, 2021

 

Hi to all,

 

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

 

*Heating and stove oils to drop by 1.5 cents a litre.

*Diesel shows a drop of 1.8 cents a litre, and...

*Gasoline shows a drop of two cents a litre.

 

 

Market highlights

 

OPEC+ overdoes it

While OPEC and OPEC+ made the decision to add more crude oil to the markets starting in May, speculators bet that tight compliancy would reign in any possibility of members breaking quotas.

      Now comes word that OPEC+ members have done exactly that-break quotas by a million barrels a day in March and April with Russia and Iraq leading the way.

      While it did nothing to affect oil prices right away, it seems that OPEC now has to deal with the possibility that extra oil may be making its way to the markets, and that might affect prices in the short term.

      In the meantime, the Joint Technical Committee for OPEC nations meets again on May 31^st with production discussions no doubt, on the table again as they weigh the current situation in the world markets.

 

Iran-US deal revival     

We could hear something this week...

The Iran-US nuclear deal is said to be close, and that could add more oil to the markets from Iran, presently still under sanction by the US. Any addition to the markets could add upwards of 2.5 million additional barrels to the markets to add to Iran’s present exports of 800,000 barrels a day.

     Discussions are in their fourth round.

     In preparation for the signing of the new deal, Iran has been loading tankers to ship oil directly to the Asian markets as soon as they each sign on the bottom line.

     Iran will be in close competition with both Iraq and Saudi Arabia for parts of the markets lost by Iran when sanctions were placed in 2018 when the US left the deal.

 

Hydrogen is the new gold at the end of the rainbow

Ireland has announced a new 120 million Euro green energy project for the manufacture of hydrogen.

     The project will be built just outside of Cork, Ireland and will be 50 megawatts of wind driven electricity generation to manufacture upwards of 20 tons of hydrogen a day. The project should be up and operating by 2023 and employ 85 people.

     The project is said to be able to remove 63,000 tons of carbon emissions from the environment.

     Just last week, Oman announced a proposed green energy project with energy companies  Enertech and Intercontinental Energy with their joint venture project 25 gigawatts in size and designed around using solar and wind energy to produce hydrogen.

 

US EIA inventories

The Energy Information Administration has reported a build in crude oil inventories last week of 1.3 million barrels.

      Gasoline supplies dropped two million barrels, while distillates also saw a drawdown on stocks of 2.3 million.

      Refiner capacity was recorded at 86.3 per cent.

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

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 20th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 7/10ths of a cent a litre.

*Diesel to increase by 8/10ths of a cent a litre, and...

*Gasoline to drop by 2/10ths of a cent a litre.

 

Market highlights

 International Energy Agency releases report

The International Energy Agency (IEA) has released a major report on the direction the world needs to follow in order to address net zero by 2050.

     The report calls for the end of use of coal as an energy source and states that countries have a long way to go before the world reaches the lofty goal of net zero by 2050, and that a cleaner energy future will result in more jobs and opportunities than any presented by oil, gas and coal.

      The report also calls for the immediate halt of development of any new oil and gas projects.

      Countries will have to adapt their own policies toward clean energy as different countries face different conditions, but all should have the same goal of meeting net zero by 2050 to ensure no rise in global temperatures that could prove devastating.

      Faith Berol, head of the IEA says the IEA stands ready to assist countries in preparing their own roadmaps to meet net zero, and also providing advice to any jurisdiction in speeding up the energy transition.

     Link to the report: Net Zero by 2050 – Analysis - IEA

 

US-Iran nuclear deal close?

In a breaking story earlier today, the BBC reported that the US and Iran were close to reaching agreement on a new nuclear deal that could have seen the lifting of some sanctions against Iran.

     The new deal could possibly see Iran release more crude to the world market that would potentially drop oil prices as the false news story did on Tuesday.

      The call made earlier by the BBC was withdrawn after sources said any agreement was premature.

      Iran has been under sanctions since leaving the 2015 deal, but any agreement could see Iran quickly increase output of oil from 2.5 million to four million barrels a day within three months.

Oman takes a jump into hydrogen

Oman has made a move to invest in hydrogen production.

     The Middle East country announced earlier today of a possible investment of $30 billion dollars to enter into the future of hydrogen in the hope of turning the country into one of the largest green producers of the fuel through solar and wind power use of electricity in the electrolysis process of hydrogen manufacturing.

      The final decision to go ahead with the project is due in 2026.

      The project involves construction of a 25 gigawatt green electricity plant for the conversion process.

US inventory data

The latest report from the Energy Information Administration shows crude oil supplies dropped 400 thousand barrels while gasoline stocks increased by 400 thousand barrels.

     Distillate supplies also dropped by 1.7 million barrels.

     US refinery capacity was reported at 86.1 percent and US domestic production reported at 11 million barrels a day, up 100 thousand barrels a day from the previous week.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 13th, 2021

 

Hi to all,

 

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

 

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

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

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

 

Market highlights

 

OPEC+ adds oil

OPEC+ started to add more oil to the world markets May 1^st, but all indicators seem to point to some OPEC members getting a head start on adding oil with OPEC member Iran adding almost 200,000 barrels a day as early as April.

      Saudi Arabia was due to add an extra 250,000 to an agreed amount divided between other OPEC+ nations of 350,000 barrels a day in May, and the same amounts due again to increase in June month.

      OPEC has yet to release figures that show exactly how much more has been added, but it is said it may be substantially over the 600,000 barrel mark with the addition of 200,000 by Iran.

      According to a Reuters News Agency survey, they found that OPEC members Algeria, Nigeria and Angola added a collective 100,000 barrels to their April output.

 

US Colonial pipeline shut down

The US Colonial pipeline has been shut down as of Friday in an apparent ransomware cyber-attack that has shut down exports from the US Gulf Coast region of refining to the US Northeast area, and gas station supplies there are drying up quick with an anticipated Friday restart of fuel deliveries set for a few days away.

     Gas stations in Atlanta, North Carolina and Florida have been shut with US governors there calling a state of emergency as supplies dry up.

     Spot prices for gasoline and other products have failed to rise to signal the impending US shortage and prices here are not anticipated to be affected though a 4/10ths of a cent have been recorded so far this week.

     In the US, some prices have hit close to three dollars a gallon on the news.

     The US government has stated that it is prepared to move product by rail and transport trucks if it is needed.

 

Inflation-there, I said it

First indications of inflation may the reason why oil prices have been tempered and spot prices not rising as much as anticipated. The US government is due to release the latest consumer price index figures this Friday that may indicate a slowdown in the US economy, this following a much weaker than expected US jobs report last Friday that showed a lower than expected 260,000 growth in jobs.

     Any indications of inflation may also signal that consumers have been saving more than the usual in the face of a continued Covid fight and rising prices for consumer items.

 

Greene report and hydrogen

Hydrogen may be the word for the future of Newfoundland and Labrador as it sets to switch direction of the province’s finances towards the creation of its version of the green economy, according to the Greene report.

     Hydrogen demand is set to skyrocket in the next couple of years as economies refocus on a fossil fuel based economy and the world seeks answers for the carbon problem.

     In the report, Greene and the volunteer committee recognise the opportunity of hydro resources and the possible use of it in the generation of hydrogen as a solution to the carbon issue, and the possible direction this province could take in transitioning the economy to a carbon neutral and green economy.

     The process of electrolysis is used to generate hydrogen. DC power is what is required in the process and provides an interesting turn to the Muskrat Falls oversupply of electricity issue as , while controversial, the electricity converts back to Ac at Soldier’s Pond.

     If you could take the unsold electricity and convert it into a tangible product that is needed like hydrogen, it could help alleviate some of the burden on Muskrat and taxpayers.

     That possibility should be seriously examined, especially if they can solve the Labrador-Island fixed link issue.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 6th, 2021

 Hi to all,

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

 

*Heating and stove oil to increase by 1.7 cents a litre.

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

*Gasoline shows an increase of 2.9 cents a litre.

 

Market highlights

 

Oil prices rise

Oil prices hit new highs since the start of the pandemic as jet fuel use has increased and vaccinations progress worldwide, a strong indicator of increased demand.

    There is some expectation out there calling for oil prices to hit $80 US by the end of the third quarter this year as more travel and a return to normal from the pandemic occurs. But the possibility of an increase to inflation rates as well as further outbreaks of covid-19still are keeping oil somewhat rangebound in recent weeks, keeping oil below $70 US. Possibly keeping oil prices below that mark is a return of Libyan exports and OPEC adding more oil in the markets starting this month.

     In spite of the situation with India and it’s covid fight, oil prices increased $ 4 US this week on the optimistic news stories.

 

Labrador consumers could be hit hard

Prices in Labrador where the winter freeze is in effect could be hit hard as spot prices have risen sharply since the last shipment of fuels to the area.

      Spot prices for gasoline have risen a rough thirty cents since last November.

      When the freeze is lifted, consumers could be in for sticker shock as prices in the area affected by the winter freeze open up to new shipments of fuels to the area.

      It is unknown when that freeze on prices will be lifted, but it’s not anticipated that prices will fall back in time to absorb the blow before the summer shipping season starts.

 

European Union hydrogen strategy

The European Union in July of 2020 announced it has endeavoured down the hydrogen highway in an effort to move away from fossil fuels and go carbon neutral by 2050.This week saw the next step with the port of Rotterdam making moves to become the European centre for hydrogen storage and production.

     The port city is planning on both green hydrogen production from renewable sources, like wind and solar, and blue hydrogen from natural gas with carbon capture and disposal under the seabed.

      The European Union hopes to make hydrogen the energy of choice in transportation use as part of that strategy.

 

US EIA inventories

The latest inventory report from the Energy Information Administration saw a slight increase in inventories of crude oil, increasing by 100 thousand barrels over the week.

     Gasoline stocks also increased by the same amount.

     Distillates decreased by 3.3 million barrels, probably because of increased jet fuel use.

     Refinery capacity increased to 85.4 percent.

     Us domestic production was reported at 10.9 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, April 29th, 2021

 

Hi to all,

 

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

 

*Heating oil, stove oil and Diesel all show a drop of 8/10ths of a cent a litre, and...

*Gasoline shows a drop of two cents a litre.

 

Market highlights

 

OPEC+ meeting cancelled

OPEC+ decided to cancel their next meeting on the 28^th as the Joint Technical Committee met ahead of the meeting to discuss the potential for cancelling any additions to oil production by the group.

     An announcement by the group earlier today did not see any potential drop in demand as affecting its policy of adding oil to the world market starting in May with the addition of 350,000 barrels from the OPEC+ group of 23 ministers and 250,000 barrels from Saudi Arabia.

    Keep in mind however, that both Japan and India are experiencing outbreaks of Covid-19 that could force the OPEC+ group to revisit the additions to production.

     The next meeting of the group is scheduled for June 1^st.

 

Granholm: Diversify!

US Energy Secretary Jennifer Granholm has warned major oil producers that they must diversify or risk becoming the next Kodak or Blockbuster Video of the energy world.

     Granholm was speaking at a special event organised by Politico last week when the message was sent out to the industry that they can no longer keep oil alone in their energy mix, and that they must diversify to other areas of the energy world or risk closure. She invited energy companies to join the green transition or be left behind as the world turns to lower carbon.

 

US EIA inventories

The latest inventory data from the Energy Information Administration shows a gain in crude stocks of 600,000 barrels while gasoline also increased by 100,000.

     Distillate stocks fell by 1.1 million barrels.

     US refinery capacity was steady at 85 percent again this week as refined products were closely in balance with inventory results.

     US gasoline  supplied to the markets was 9.1 million barrels a day against 5.3 million barrels a day for the same timeframe last year.

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

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, April 22, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 2.6 cents a litre.

*Diesel to increase by 2.8 cents a litre, and...

*Gasoline to increase by 2.5 cents a litre.

 

Market highlights

 

Happy anniversary

It was one year ago yesterday that a record low price for West Texas Intermediate was recorded as the demand for oil crushed demand and prices for WTI went negative.

     Contractors and speculators couldn’t get rid of oil bought under contracts before the month end and storage fell sharply as covid-19 hit the oil industry and demand for refined products was crushed.

     April 20^th, 2020 saw WTI go to a negative $37 US a barrel as speculators even went as far to lease storage space off the US strategic reserve for the resulting glut from the demand crush.

     It’s been a long way back, but WTI is now averaging $63 US a barrel and demand is expected to increase as vaccinations worldwide continue to slowly ramp up.

 

Oil to trade higher?

It’s not the first time I’ve heard this possibility, but world oil trading company Vitol Group is expecting a major increase in world demand for oil and oil products as the world emerges from the pandemic.

     Prices have been recovering since last year’s fall in prices and the ensuing demand crunch that followed. Again however, the prospect of any recovery is hinging on possibilities of other breakouts of the covid-19 virus along with its variants that have cause for concern.

     Vitol Group expects that demand will see a sharp recovery as we get further through 2021 and into 2022 with demand increasing from today’s levels by another seven to eight million barrels a day by the end of 2022.

     Demand for refined products like jet fuel are still lagging however, and will still average 1.5 million barrels a day lower than normal by year end.

     Vitol expects oil to average $70 to $75 US a barrel by year end on rising demand.

 

Gasoline shortage?

I am getting notes that more than a few stations in the northeast Avalon area of the province have been selling premium gasoline for regular prices as deliveries of regular gasoline have been non-existent.

    Not that that deal is a bad thing, but...

    Reports range from South River to Costco where stations have been doing that. Again, not the first time I have seen that happen as deliveries may be well up with increasing demand.

   

US EIA inventories

The latest data from the US Energy Information Administration last week again showed a draw on crude inventories as stocks fell by 5.9 million barrels.

     Gasoline inventories rose by 300 thousand barrels and distillate stocks dropped by 2.1 million barrels.

     Refiner capacity was reported at 85 percent.

     US domestic production increased by 100 thousand barrels to eleven million barrels a day.

     Interesting to note that gasoline supplied to the US markets last week was a rough 8.9 million barrels a day, while the same time last year was a recorded low of 5.08 million barrels a day at the height of the demand crush.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil