Price changes for Thursday, December 20th, 2018

Hi to all,

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

Keep in mind winter blending as that mix may throw off the distillate numbers somewhat, and also that there is EXTREME volatility in the numbers that could be pointing the numbers lower than what I have here now.

*Heating and stove oils show a drop of 8/10ths of a cent a litre.

*Diesel fuel shows a drop of 9/10ths of a cent, and...

*Gasoline shows a drop of 1.3 cents a litre.

Market highlights

OPEC cuts ineffective?

Talks of a slowing world economy not only sent the stock markets into a volatile condition the last few days, but oil is also starting to pay the price on a possible slowdown.

     With less demand for oil in a slowing economy, the prospects of absorbing a glut worldwide is becoming doubtful. Growing shale production in the U.S has seeded doubts that oil prices will have support as more oil is seen to be added to the markets. The last two days have seen oil retreat  with even refined prices starting to trade much lower right along with it, possibly to reflected at the pumps over the next two weeks.

      The likelihood of cuts being effective is also being outweighed by word from Russia that oil production has increased there, even with the word that the country was keen to join OPEC in making their last round of cuts to oil production.

API inventories up

The American Petroleum Institute also released their inventory data late this evening that also showed a moderate build of 3.5 million barrels in overall U.S crude inventories, along with building inventories in Cushing, Oklahoma where West Texas Intermediate is traded. Oil was up there by just over a million.

      Inventories of gasoline were also said to be up just over 1.7 million barrels nationwide.

      All eyes will be on the Energy Information Administration inventory report due shortly after 12:30PM NST for further word on oil inventory, as well as any growth in U.S domestic production figures.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, December 13th, 2018

Hi to all,

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

ALL DATA IS IN, SO THERE WON’T BE A NEED FOR A WEDNESDAY UPDATE.

*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 by an even penny.

Market highlights

OPEC+ (Plus) institutes production cut

Both OPEC and non-OPEC members, otherwise known as OPEC+ have agreed as of Friday past, to institute a round of production cuts that amounts to a little over a million barrels a day with OPEC absorbing about 800,000 barrels of that.

     The agreement between the two groups is for six months and totals close to 1.2 million barrels.

     Exempt from making any cuts are Venezuela, Iran and Libya who are all under production pressures, but Iran having been placed under sanction by the U.S and other counties.

Canadian dollar loses ground

The Canadian dollar lost more ground against the US dollar over the last week losing about two cents against it’s southern counterpart.

      Weakness in resource prices like oil is mostly to blame, but a busy U.S economy also figures into the equation.

Expect market instability

Markets will be shaky the next few weeks and months as markets weigh evidence that the cuts will have some sort of positive impacts on prices, but there are a couple of other factors worth watching.

     A worldwide economic slowdown is seen as being on its way as stock markets have shown. Lower than estimated returns have spurred the thought that there has been some downturn in demand and that has been reinforced with OPEC making cuts to what some believe as an “over-supplied” oil market.

     A tit-for-tat spat between the US and China continues, even though a 90 day truce was agreed upon early on Saturday as both countries try to find a solution to their trade issues. Tariffs placed on Chinese goods were enough to bare watching as a slowdown in the Chinese economy is said to be starting. However, late news this evening includes a telltale sign that China may not be hurting as much as first thought as imports of oil in November hit ten million barrels a day for the first time ever.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

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Price changes for Thursday, December 6th, 2018

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that the distillate fuels are subject to winter blending, so they may be off slightly.

*Heating and stove oils to drop by 2.4 cents a litre.

*Diesel fuel to drop by 2.5 cents a litre, and...

*Gasoline to drop by 8/10ths of a cent a litre.

These numbers will be adjusted again via social media Wednesday morning when the last data-point becomes available.

Market highlights

Alberta and OPEC both to cut production

In what some may think to be an unusual move, Alberta will do as OPEC countries have long been doing to support prices from time to time. For the first time I can think of, Alberta will cut back oil production by 325,000 barrels a day in order to try and support prices for their land-locked oil resources.

     By limiting production by 8.5 percent, the Notley government is hoping that the price for Alberta crude oils will rise, thus increasing their revenue take and helping to keep Alberta fields working.

     Meanwhile, in the Middle East, and after the G20 meetings in Argentina, both Saudi Arabia, other OPEC members and Russia are talking about an initial production cut of 1.3 million barrels a day. But latest talk out of the Middle East is signaling that cut may be reduced to a million barrels a day as Alberta has taken over 325,000 thus making OPEC think twice about cuts that were to be brought in.

      We’ll find out later this week exactly how much OPEC will cut production by later this week when OPEC meets again in Vienna.

    

US-China trade war ceasefire

The US and China have signaled their intent to call a 90 day ceasefire in their trade war in an attempt to reach an agreement on the imposition of tariffs on goods manufactured in China.

      The Chinese were countering the tariff call by the US with a call for a twenty five percent tariff on imports of U.S crude. While oil increased in price just a little, it has since flattened out on doubts an agreement could be reached.

      Concerns over oil prices arose with the possibility of Chinese economic troubles had tariffs been placed on Chinese goods and oil fell appreciably as a result. Mind you, Trump has said that placing major tariffs on China remained a possibility if the US doesn’t achieve what it believes to be a fair deal on trade and

Global economic slowdown on the way?

Concerns over a global economic slowdown continues to weigh against oil again today as some companies continue to report lower than expected earnings.

      The issues of lower earnings seem to rise every few days in the markets and that weighs against oil as demand is seen to possibly slip with any worldwide slowdown.

Crude averages for this year so far

Merrill Lynch is reporting that the average price for Brent so far this year is $72.80 a barrel, while West Texas Intermediate coming in at $66.10 a barrel US.

      Brent has averaged $72.86 a barrel between April 1^st and the end of October according to my numbers.

      Pretty close!

      The province has said it thinks Brent will average $74 US a barrel for this fiscal year.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil