Numbers show 'up a little"

With all the goings on at my place these last two weeks, I really haven't had the time to do a lot of posting and tracking of the news in the oil markets.

I have had the time however, to go though the numbers and see what's in store for the consumers out there in Newfoundland and Labrador.

Here's what I have for Thursday morning:

• Heating and stove oils to increase by 1.55 cents per litre.
• Diesel to increase by 1.6 or 1.7 cents per litre, and...
• Gasoline to increase by 1.6 cents per litre.

The US dollar lost against other world currencies over the past two weeks and that resulted in heavy investment in commodities like oil, driving those prices upwards over the time frame. Oil gained almost $8 US barrel since July 14th.

One side effect was that the Canadian dollar also was one of those currencies that gained ground a s a result of the investment in oil, with the dollar gaining over three cents against the US greenback.

Anyway, prices will be up slightly, not that it wasn't predicted to be like that with some volatility over the summer!

Hope it all helps!

Regards,

George

No increase in prices this week

Watching the markets the past few days probably made some people a little nervous, especially in the thinking that with a rise in oil prices of almost $4.50 US a barrel.

My email has been littered with the question "If"...

Here's the reality...

The numbers are not there for interruption to prices to occur. Both heating and stove oils as well as diesel, are now at "break even" with neither an increase or decrease showing in the numbers.

Gasoline prices show down by a half cent, so far...

While spot prices for all the fuels I measure has gone up a little, we are still a little under the average for the last price setting this week. Keep in mind that, if the trend continues, we may see a slight bump in prices at the next price setting next week, that's if the numbers allow for it and we see the price of the refined comodities take off again. This latest run-up has been caused by positive economic news out of Chine and a decrease in the US dollar. Of course, whenever we see the US dollar slide, it's a sign that traders will start investing in commodities like refined oil products, as a hedge against inflation.

Hope this will clear the air a little?

Any questions, drop me a note...

Regards,

George

So, where are prices going from here?

It's a nice summer morning here in St. John's, especially nicer after hearing the news that fuel prices are down; and a lot of questions from people asking if the downwards trend will continue...

Here's hoping! The evidence is certainly pointing towards "steady as she goes" and also "down" in the best of scenarios. If I were an oil trader, I think I would quit, let's put it that way.

Right now, the news is not good if you are an oil man. With waning consumer demand for gasoline and another build in inventories this week, it's hard to wonder why there should be any price increase in the foreseeable future. The fact that North American drivers just aren't buying to the same degree that a lower price should dictate, should be a forewarning to most of the change that drivers are facing. Consumers are not cutting back on consumption because of price, they are doing it out of necessity that the economic situation is bringing to them. Prices for gasoline are now about 35 per cent lower than the same time period last year, yet demand, is recorded at a mere 6/10ths of a percentage point above last years numbers.

Consumers can't spend because of the uncertainty of the ongoing economic recession. I like to call this "enforced conservation" a new economic term you'll soon be hearing about in your favorite business news network or late night TV host!

Enter the ongoing prospect of an oil glut in the markets. While the data from the US Energy Information Administration showed a draw on US inventory, the same still shows a huge 47 million barrel surplus in stock in holding tanks that should be heavily drawn upon during summer months of the past. The word from OPEC is that they produced some 57,000 barrels per day more than their own self-imposed quotas during the month of June and this is only now coming into the North American inventory grid. Talks are abounding of $45 a barrel US oil in August, not heard for a long time during peak summer driving season. Some experts like Philip Verlager are even predicting $20 US a barrel oil and an imminent collapse in prices this winter at best.

Also adding to the downwards pressure on gasoline pricing in the coming weeks is a pick-up in US refinery capacity, up again this week to almost 88 per cent. With added capacity and waning demand, why would I as a trader even bother investing? There's no return here.

The only possibility of upwards pressure on oil will have to come from here but, right now, it's showing just like a St. John's July 16th morning : Nothing but clear skies!

The trend of falling prices might be around for a while. The news from the Alberta oil fields won't be all good if that's the case.

Hope this answers a few questions out there?

Regards,

George

Update #2

Final Numbers

Here's what I have to come for Thursday morning with all fourteen days of data on hand:

• Heating and stove oils to drop by 4.79 a litre.
• Diesel down by 4.7 cents a litre, and...
• Gasoline to drop by 6.3 cents a litre.

I tried to get a copy of the press release posted but, for some ungodly reason, it wouldn't allow me.

The old "copy and paste thing just didn't do it this time. It's something I'll have to work on, I guess!

Hmmm....

Regards,

George

Update #1

Numbers still showing "down"

Numbers are still reflecting the big drop in spot prices last week and they will impact all prices this week (Thursday) when the Public Utilities Board sets prices for the next pricing period.

Here's what I have with thirteen days of data at hand.

• Heating and stove oils are down by 4.55 cents a litre.
• Diesel is down by 4.5 or 4.6 cents a litre with taxes in, and...
• Gasoline is down by 6.1 cents a litre.

One more day to go here but there may be no more real changes in pricing other than what I have. Another day may mean a couple more tenths off these numbers.

I'll post another update for everyone tomorrow evening and post the press release too.

Regards for now!

George

The week so far...

Here's a little update on the numbers I have. After the disappointing finish up to Tuesday, I think maybe I should keep everyone in tune as to what is transpiring out there...

First off, as regards to the possibility earlier this week that the PUB may use the interrupter formula, I'm not surprised that they never.

I'm more surprised that they didn't have the market volatility to show a more significant drop that would have allowed the formula to be used. In other words, that their numbers reflected more than four cents for the formula to kick in.

In the end, my numbers showed an exact 3.77 cents a litre downwards, just shy of the required four cents for interruption to occur.

Yes, it sucks to be out by that much but, that's the rule that is used.

An important point here to remember is that, while other jurisdictions see an almost immediate drop in prices relected in their respective markets because of the competative nature of their markets, our numbers are usually hit the pumps roughly a week later if they meet criteria for interruption. (We can only wish for competition here in Newfoundland and Labrador to be the final arbitor of the retail petroleum price!)

Conversely, whenever there is an increase in other respective markets, these increases are also immediate to their various areas and we then see any respective increases about a week after the event occurs. Here, we also take a two week (one week during interrupt scenarios) average of price movements before any alowable increase or decrease is passed on and that timeframe is also taken into account simply to allow any movements in pricing to "work itself out" as during the Katrina and Rita hurricane events of August and September 2005.

Other centers saw gouging to the point that some retailers in the Stratford, Ontario region charged upwards of $2.25 a litre for gasoline.

Halifax and the area there saw $1.89 a litre until word got out that the prices at the pump outweighed the spot prices of the day and we got onto them.

The fact is, is that we hit $1.48 a litre here in St. John's because we were regulated. Prices didn't change as much as the companies wanted them to fir the simple reason that the PUB waited an extra day to let the market work itself out, and it did.

I'm getting off-track here again...lol

Anyway, just to keep you all up to speed on what I have with nine days done and still five more days to go:

• Heating and stove oils are pointing down by 3.50 cents per litre.
• Diesel is down by 3.4 a litre and...
• Gasoline now shows down by 5.1 cents a litre.

My guess for the result after the full fourteen days are in?

• Heating and stove oils down by 4.5 cents a litre.
• Diesel down by 5.0 cents a litre and...
• Gasoline down by 6.5 cents a litre.

See how close they'll be after Tuesday night!

Anyone else care to take a shot at it?

Regards,

George

Oh well...No suprise that prices didn't drop

I'm irked...

Maybe I should just keep quiet every time I get a way of thinking and keep my thoughts to myself. No suprise that I'm a little disappointed though but in hopeful expectations for next weeks price setting nonetheless.

After Tuesday, I thought that the numbers would show those for interruption.

Didn't happen...

Numbers here showed a good start to a price drop but, for some reason, and I'm still looking into it, the drop showed a "stall" and the numbers averaged out to be 3.77 cents a litre down, just a mere 23/100ths away from the required four cents a litre for interruption to occur. Another day and things would have kicked in.

It was painful to watch the numbers come up on the calculator!

So, we have to wait for the regular price setting fornext week it seems because we know that the Ultramars, ESSO's, Irvings and North Atlantics aren't going to drop prices ahead of time on their own!

Use it sparingly for the next six days anyway. So far, with Wednesday data in, numbers are now showing close on a nickel down at the pumps. If oil continues to drop in the days leading up to the 14th, then the drop at the pumps could be significantly more.

Regards,

George

Is there enough volatility in the markets this week?

Those of you watching the markets this week are probably asking the same question this week, wondering if consumers here in the province will see a drop in fuel pricing: Is there enough volatility in the markets right now, to warrant a drop in prices?

This week shows a drop of almost seven bucks a barrel US with corresponding spot prices dropping by nearly five cents on a litre after yesterdays market close. While my average for the last pricing session was set at 58.05 cents a litre, that average has touched near three cents after yesterdays market activity. The average for the preceding six days I now have at 55.38 cents a litre, a difference of close to 2.7 cents a litre.

Interruption requires that four cents a litre, up or down, from the previous price setting, are needed for interruption to occur.

That being said, again today, we're looking at gasoline trading down by another two cents a US gallon and that number does not include any market volatility that my numbers do not record.

There is a possibility that gasoline prices may be adjusted downwards after Wednesday night as a result of that, market volatility.

Other fuels like heating oils, stove oils and diesels, are also down but are less than the 2.7 or so that I have for gasoline.

Trouble here is that I also have numbers for the first six days that also shows greater than 3.4 cents a litre down on gasoline, taxes not included.

With oil prices collapsing again in the face of weakening demand and bad economic news, it may be well advised to hold back on any purchases you might want to make in the next day or so, that is, until we see what the Public Utilities Board is going to do this coming Thursday.

Those in other jurisdictions might want to follow the same advice: drops in pricing are on the way!

I'll know more after tonight's numbers come in for Newfoundland and Labrador, so stay tuned!

It's going to be close!

Regards,

George

Drops coming you say?

Might be the first time some of you will be happy with me, at least for the next two weeks.

Sorry I'm posting late as I was working late last night.

Here's what I have, with all the data in. Nothing substantial but it all helps I guess:

• Diesel to drop by 3/10ths of a cent.
• Heating and stove oils to drop by 64/100ths of a cent, and...
• Gasoline to drop by 1.5 cents a litre.

No official release on this one this time. What you're looking at is coming for this Thursday morning.

Hope it works out!

Regards,

George