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Tuesday, March 02, 2021

Price changes for Thursday, March 4th, 2021

 

Hi to all,

 

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

 

*Heating, stove oils and Diesel all show show an increase of 7/10ths of a cent a litre.

*Gasoline shows an increase of 2.3 cents a litre.

 

Market highlights

 

OPEC regular meeting this week

OPEC will have a meeting this Thursday to discuss adding more oil to the markets, but the OPEC Joint Technical Committee(JTC) has been meeting ahead of OPEC’s member meeting to have a look at the market conditions as they sit to see where OPEC+ membership should go with production output increases.

     General consensus at the early meetings seem to indicate that OPEC will increase production through June month by adding up to 2.3 million barrels a day, starting with an increase of 1.4  million barrels in April month, rising to 2.3 by the end of June.

    No sign of whether Saudi Arabia will add their own production cut of a million barrels a day back into the mix, but the consensus seems to be forming that any additional production will be met with a close examination of world economic recovery as it sees recovery continuing with more Covid-19 vaccine availability.

     23 nations form the OPEC+ group.

 

Oil glut quickly disappearing?

A glut of oil left on the markets after a deep drop in consumption left by the Covid pandemic is seemingly disappearing, sparking a concern from some that the world could be left to pay higher oil and refined prices if OPEC+ does not address the supply crunch that could be coming.

     Countries such as India are warning that any harsh increase in oil prices will damage a weak returning world economy, and some are bullish on the prospects of Saudi Arabia putting back the million barrels a day they cut in February as a measure to prevent any rapid increase in oil prices.

 

Toyota unveils new fuel cell

Toyota’s entry into the hydrogen/electric vehicle market is looking to become a gamechanger in the hydrogen powered vehicle industry.

     Toyota unveiled a new fuel cell that will increase the range in its Mirai to almost 650 kilometers, giving Toyota the advantage of being a major supplier of fuel cell technology that it hopes will make it a industry leader in hydrogen fuel cell technology in the coming years.

    

US EIA inventory report

The latest inventory report from the Energy Information Administration is out and it showed a modest build in crude oil inventories of just 1.3 million barrels.

     Gasoline inventories remain unchanged while distillates were down five million barrels.

     US domestic production was reported at 9.7 million barrels a day, well down as the Texas freeze was shown to take hold in the inventory figures.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil   

Tuesday, February 23, 2021

Price changes for Thursday, February 25th, 2021

 

Hi to all,

 

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

 

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

*Diesel shows an increase of 2.1 cents, and...

*Gasoline shows an increase of 3.9 cents a litre.

 

Market highlights

 

Oil and refined prices continue to rise

Crude oil and refined product prices continued to rise this past week as Texans dealt with a severe weather system that devastated the state’s electrical system, knocking out almost 1.1 million barrels a day in refining, and also taking out crude oil production estimated now as much as two million barrels a day as pipelines and related infrastructure froze up.

     Temperatures went as low as four degrees Fahrenheit and winter weather pounded electricity users.

      Some refining infrastructure may come back online soon though, and that may bring back some promise of lower prices as prices south of the border have risen as much as thirty cents a gallon there. Some refiners are reporting that they may not be back online and in production for another month.

      Electricity costs have also skyrocketed, costing as much as $9000 for a  megawatt of electricity.

 

Saudi’s and Russia clash on oil?

According to Oilprice.com, the Russians and Saudi Arabia may be about to clash again over the sudden rise of oil prices and the timing of a return to production cut between OPEC+ and Russia.

     While Saudi Arabia wants to keep cuts at their present levels heading into April month, the Russian energy minister Alexander Novak is on record as saying that the current price of oil is reflective of the market conditions and that markets have returned to balance.

     Russia and OPEC+ will meet again March 3-4th to discuss the condition of the markets where it is believed that the Saudi’s will use their million barrel cut in production as a bargaining chip to attaining a new deal on production at next week’s meetings.

     Oil prices have risen sharply and has led some OPEC+ members to seek higher production levels to take advantage of the price increase.

 

US EIA inventory report

US crude oil inventories dropped 7.3 million barrels in the US EIA inventory report up to February 12th.

     Gasoline supplies increased by 700 thousand barrels and distillates dropped 3.4 million barrels on 83.1 percent refiner capacity in the week ahead of the Texas blackout.

     US domestic production was reported at 10.8 million barrels a day for the same week.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, February 16, 2021

Price changes for Thursday, February 18th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 1.8 cents a litre.

*Diesel and Gasoline both to increase by 2.1 cents a litre.

 

Market highlights

 

Texas freeze drives up prices

US refineries in Texas have been taken offline by extreme cold and electrical failures after a deep freeze struck the refining state over the past few days with temperatures in the single digits Fahrenheit.

     Temperatures were recorded as low as four degrees as the winter cold brought arctic air over the state, causing power failures that have taken half of the state’s electricity offline.

    Oil prices gained on the news as refined prices also took a climb as speculators chimed in on lost refiner capacity that could last until the cold temperatures abate and electrical repairs are made.

     It’s the first time in recent memory that I can remember capacity issues caused in Texas due to cold weather. Usually it’s all about hurricane damage. Gasoline price s have risen by 13 cents a US gallon since last Wednesday on the weather event.

     In the meantime, electricity costs in the southwestern US also took a hit with electricity prices ranging upwards of $9000 a megawatt hour from an average of $25 a megawatt hour.                             

     According to Oilprice.com, a Tesla costs about $900 to charge up under these prices.

 

Storm hits domestic production

Connected to the weather in Texas, the Permian Basin, an oil producing region near the Texas Oklahoma border also has had production disrupted, removing almost one third of US daily production out of the markets.

    Estimates are almost 3.5 million barrels a day of production has been removed from the US total domestic production numbers of 10.9 million barrels a day, causing the rise in oil prices as well. Production is not expected to return to normal levels until sometime around February 22nd. This could be around for a bit.

 

US EIA inventory data

US refiners continued to chew into oil reserves last week (before the storm) as crude oil supplies dropped 6.3 million barrels.

     Gasoline stocks increased 4.3 million barrels, while distillates dropped 1.7 million barrels.

     Refineries operated at 83 percent capacity, just seven points below the normal before Covid hit last year, indicating higher demand.

     US domestic production was reported at 10.9 million barrels a day (pre-storm).

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil

Tuesday, February 09, 2021

Price changes for Thursday, February 12th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 3.5 cents a litre.

*Diesel to increase by 3.2 cents a litre, and...

*Gasoline shows an increase of 2.5 cents a litre.

 

Market highlights

 

Hedge funds betting on summer

It’s not just about refiners having troubles moving product that has increased costs, and thus prices for consumers, but word is out that hedge funds are starting to bet on vaccine distribution that will help increase prices for oil and refined products as demand picks up right along with Covid-19 vaccine availability.

     Here in Canada, Prime Minister Justin Trudeau made an announcement that the Pfizer vaccine will amount to 20 million doses by the spring at the time when traditional run-ups in prices really starts to catch for gasoline, bringing with it upwards pressure on prices.

     To quote from the Reuters story,

   By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters,” said David D. Tawil, co-founder at New York-based event-driven hedge fund, Maglan Capital, and interim CEO of Centaurus Energy”.

      Oil prices have increased $4 US a barrel over the last week.

 

Oil to increase to $100 US?

It’s a bold prediction, but again precipitated on word of further covid-19 vaccine rollout as markets have turned their attention to the futures markets and speculators play with the scenario of returning demand.

     That means hopes for our offshore as oil will rebound-if the predictions from Amrita Sen of Energy Aspects is right.

     Speaking to Bloomberg, he said that while, right now, the markets have gotten ahead of themselves with demand still weak, vaccine rollout has the promise of increased demand in the second half of this year.

     The only mitigating factor may very well be how many producers get back into the market of production, and how fast the US production figures will be in turning back to full production pre-covid.

     US domestic production was recorded at 10.9 million barrels a day, falling from 13.5 million barrels a day the same time last year.

     Also, Saudi Arabian production is due to pick up again, adding a million barrels a day by the end of March, putting some pressure on growth.

 

US EIA inventories

The latest report from the Energy Information Administration, crude oil supplies dropped by a million barrels last week.

     Gasoline inventories were up by 4.3 million, while distillate inventories remained unchanged from the week previous.

     Refiner capacity was recorded at 82.3 percent and US domestic production reported at 10.9 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, February 02, 2021

Price changes for Thursday, February 4th, 2021

 

Hi to all,

 

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

 

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

*Diesel to increase by 1.6 cents a litre, and...

*Gasoline to increase by 1.8 cents a litre.

 

Market news

 

Markets continue to tighten supplies

Crude oil prices continued to increase this week as markets were seen to tighten supplies as Saudi Arabian cuts to production have started, with the Saudi’s promising to cut an additional one million barrels of production a day that started February 1st.

     However, markets have been watching the possibility of another developing situation where the Saudi’s may lose market share as others jump in to fill the need left open for oil by the Saudi cut. Other oil producers like Guyana and US shale producers could be set to increase production to fill the gap immediately left by the OPEC country that left the markets with a shortfall of oil for the next two months.

     The Saudi’s are set to keep production down until the end of March 2021.

 

Goldman Sachs increases estimates

Goldman Sachs expects oil consumption to have a robust rebound to at least 100 million barrels a day by the end of August, back near levels not seen since the start of the pandemic.

     According to Goldman Sachs, oil supplies faced a deficit of close to 2.5 million barrels a day in the last quarter of 2020 that helped set prices for crude in the upwards direction. The only factor that could limit to forecast on future demand are new outbreaks of Covid-19.

 

US crude oil inventory report

The latest Energy Information Administration inventory report showed another drop in crude oil inventories last Wednesday as refiners continued to maintain capacity levels above the eighty percent mark for the fifth week in a row. Capacity was reported at 81.7 percent that maybe indicative of slowly returning demand.

     Gasoline inventories were reported up by 2.5 million barrels, while distillates were down 800 thousand barrels.

     US domestic production was down 100 thousand barrels a day to 10.9 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Wednesday, January 27, 2021

Price changes for Thursday, January 28th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to drop by a half cent a litre.

*Diesel shows a drop of 3/10ths of a cent, and...

*Gasoline shows an increase of a half cent a litre.

 

Market highlights

 

Markets are showing crude mostly steady this past week as they weigh the impacts of Saudi cuts of an added million barrels a day due to start February 1st, and with Russia and Iraq also cutting back on exports by an added 300,000 from Iraq, the markets are beginning to show signs of tightening crude oil supplies amidst the covid-19 pandemic.

 

Average prices may be up here, but...

Irving Oil has applied to the New Brunswick EUB (Energy and Utilities Board) for an immediate increase to all fuel prices that would rank with increases that consumers saw through the Public Utilities Board here from NARL’s request for immediate assistance two months ago.

      Irving says that it has faced severe difficulties with its company as margins have tightened against rising costs and lower demand. They have applied for an increase of 4.09 cents plus taxes on motor fuels and a 3.02 cent a litre increase to heating fuels. These numbers are about eighty percent of what they have asked for in a scheduled hearing due to happen in March.

      The hearings into the application will continue next week as more information from Irving is wanted.

       Story here: Irving Oil request for 'urgent' wholesale price hike stalls over redacted evidence | CBC News

         Refiners everywhere are facing the same problems with jet, distillate marine and transportation fuels all being hit hard from the Covid-19 pandemic with some refiners worldwide shutting their doors or reducing their production markedly.

 

US EIA inventories

The Energy Information Administration is reporting another build in US crude inventories in last week’s reporting, adding another 4.4 million barrels to crude stocks.

     Gasoline inventories were down by 300 thousand barrels, while distillates were up 500 thousand barrels.

     Refiner capacity was reported at 82.5 percent as refiners tried to chew into inventories.

     US domestic oil production was reported at 11 million barrels a day, down two million barrels a day from the same timeframe last year.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Tuesday, January 12, 2021

Price changes for Thursday, January 14th, 2021

 

Hi to all,

 

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

 

*Heating and stove oil to increase by 2.9 cents a litre.

*Diesel to increase by 3.2 cents, and...

*Gasoline shows an increase of 4.4 cents a litre.

 

Market highlights

Markets have been responding all week to the Saudi surprise oil production cut immediately after last week’s OPEC+ meeting where Saudi Arabia announced a further cut to their own production of an added one million barrels a day.

    Further support for higher oil was also featured in last week’s Energy Information Agency report which showed a huge drop in crude oil inventories of almost eight million barrels.

    Oil prices have been well up after the meetings with oil prices rising another $5 US a barrel over the intervening timeframe. Expectations of a tightening oil supply situation has helped increase prices as the surprise cut is said to be well above expectations of the markets.

     Brent prices closed close to $57 US a barrel today, rising from $51.80 US last Tuesday.

    

OPEC compliance drops

According to Petro-Logistics, OPEC+ compliance amongst its members fell to just 75 percent after some countries were seen to break away somewhat from imposed quotas ahead of last week’s OPEC+ meeting, but you couldn’t tell by oil’s reaction as figures were only released today.

     Other companies have had higher OPEC+ compliance numbers the past few days with numbers in excess of 75 percent.

     OPEC and non-OPEC members agreed to a 9.7 million barrel per day cut several months ago, but added more oil to the markets over the intervening months.

     Total cuts now amount to 7.7 million barrels a day amongst members as of December.

 

Refiners may still pay a price

According to reports from the International Energy Agency, worldwide refinery capacity is still over 20 million barrels over the needed capacity worldwide.

     Over 1.7 million barrels a day of refinery production capacity has been permanently closed worldwide since the start of the pandemic and it remains to be seen if it will ever return based on how alternatives have been impacting the markets.

      With countries now putting timeframes on the end of new fossil fuel vehicle sales by 2030 to 2040, it now remains in doubt whether any capacity will return, or any refineries to re-open again within the highly competitive refining markets.

 

US EIA inventories

The latest numbers are out from the US Energy Information administration.

     Crude supplies showed a drawdown of 8.1 million barrels, while gasoline inventories saw an increase of 4.5 million in the week after Christmas.

     Distillates also saw an increase of 6.4 million barrels.

     Refinery capacity was recorded at 80.7 percent, while US domestic production was steady at 11 million barrels a day.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil