Price changes for Thursday, July 11th, 2019

Hi to all,



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



*Heating, stove and Diesel fuel all show a drop of 1.8 cents a litre.

*Gasoline shows an increase of 5/10ths of a cent a litre.



Market highlights



US inventory data

US inventories showed just a slight draw against oil supplies last week as crude showed a retreat of 1.1 million barrels.

    Gasoline supplies dropped by 1.6 million barrels.

     Refiner capacity remained well up, showing refiners are meeting the needs of the consumer market, with production ranging 94.2 percent for the week.

     Distillate supplies showed an increase of 1.4 million barrels.

     US domestic production also increased week over week, adding another 100,000 barrels for total production of 12.2 million barrels a day, mostly from shale reserves and output from Alaska.



Iran situation escalates

A British force sailing out of Gibraltar halted an Iranian tanker late last week. The tanker was halted under the guides of sanctions placed against Syria by the European Union.

     The tanker was believed to be on it’s way to Syrian refineries after taking the long way around the horn of Africa before entering the Mediterranean Ocean.



Keeping an eye to Libya

The unrest in Libya continues and the fight goes on between two factions trying to gain the throne of government.

     While the fighting goes on, no disruptions to exports have been reported so far, but with fighting going on between the Libyan National Army and the Government of National Accord. Most fighting is around Tripoli, but could disrupt exports if new centres of fighting open up.

     Oi prices could rise if the fighting spreads. Last report I have on total Libyan production shows the North African country producing an average of 1.1 million barrels a day.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, July 4th, 2019

Hi to all,



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



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

*Diesel shows an increase of 1.3 cents, and...

*Gasoline shows an increase of 3.1 cents a litre.



Market highlights



US-China tariff war taking a “hiatus”

Oil prices rose a solid three dollars a US barrel over the past seven days as the US and China were said to meet at the G20 meetings in Japan. Oil rose as speculation in the markets swayed toward the thought that demand would pick up for oil if there was to be any settlement in the dispute between the US and China.

      Oil started a retreat today on word that only a truce was agreed upon to allow for more time for discussions to happen. Headwinds still are out there in efforts to get nearly $250 billion in tariffs removed from Chinese goods that have been hit.



US inventories take a hit

The inventory report from the US Energy Information Administration was released last Wednesday that also saw another impetus for oil to rise.

     Crude oil inventories took a major hit as supplies dipped by 12.8 million barrels, but still remained five percentage points over the average for this time of year.

     Gasoline supplies also dipped a million barrels as refiner capacity increased, springing signs of a slight increase in demand even though some describe demand as being “tempered”.

     US domestic production also dropped another hundred thousand barrels to show the US producing 12.1 million barrels a day, a drop of three hundred thousand in three weeks.



Costco moves west-but prices haven’t dropped-yet

While the new Costco location has opened, the hoped for continued difference in prices at the pumps in the west end of the city haven’t reacted to the new competition-yet.

     While prices saw a noticeable drop in the Immediate St. John’s northeast area the last couple of years, no real difference in prices have been seen yet with the move by Costco.

     Worth noting is that prices in St. John’s and the northeast ranged well below the regulated maximum during Costco’s time there.

      I’ll be keeping an eye to this one for any price moves in the coming weeks.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, June 27th, 2019

Hi to all,



Here’s what I have for this week’s price changes. Sorry it’s so late, but I’m just home from a late night at work!



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

*Diesel to increase by 2.6 cents a litre,  and...

*Gasoline shows an increase of 3.8 cents a litre.



Market highlights



US-Iran tensions play out

What started as attacks against two tankers last week has expanded to a shootdown of a US drone allegedly in Iranian airspace that threatens to expand into a full-out conflict. Oil rose the past week as fears of a supply disruption of anything leaving through the Straits of Hormuz and the Gulf of Oman.

     Things seemed to ease a little just yesterday as President Trump seemed to downplay the threat and shootdown of a US military drone as being from someone not acting on the part of the Iranian government.



US-China trade and tariff talks

Market traders seemed upbeat the last few days after word leaked that the US sent negotiating teams ahead of Donald Trumps meeting with China’s Xi Jinping, president of the Asian country, in the hope that common ground could be found in bringing an end to the tariff dispute between the two major economic powers.

    Both leaders will hopefully meet at the G20 meeting later this week to have direct talks to alleviate the dispute.

     Any positive outcome will support and likely raise further, the price of oil as anticipated demand will pick up.



Philadelphia refinery fire

A fire at the Philadelphia Energy Solutions plant has taken 200,000 barrels of production out of a total of 335,000 barrel a day refinery in the U.S northeast.

     While initially thought to be critical, the stock of gasoline and production at the refinery will be replaced with product through the U.S Colonial Pipeline system, bringing in any shortfall of supplies to market.

     It is estimated that it may take upwards of two years to have the refinery back to full production as the fire destroyed a chunk of available overall production.

     While gasoline prices initially made strong upwards moves, prices have since stabilized.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, June 20th, 2019

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 a litre.

*Diesel to increase by 3/10ths of a cent, and...

*Gasoline to decrease by 3/10ths of a cent a litre.



Market highlights



US inventories up again

US inventories of crude oil were up again this past week for the fourth week in a row, continuing speculation that there could soon be another oversupply of crude building in the markets.

     In spite of cuts to production from Iran, Venezuela and other OPEC and non-OPEC production, prices have continued to fall in the face of a possible world economic slowdown.

     Crude oil showed an extra 2.2 million barrels over the week previous and Gasoline supply was also up another 800,000 barrels.

     Refiner capacity was reported at 93.2 percent, up another two points over the previous week.



Oil rises on tanker attacks

Speculation that Iran was behind two attacks against oil tankers in the Gulf of Oman last week also saw oil rise as speculators see the attacks as a threat to overall world supplies if the attacks continue.

     The two tankers in question were under Japanese and Norwegian ownership, but no connection has been made between that, and the fact that Japan’s Prime Minister Shinzo Abe is the chief negotiator trying to get Iran and the United States back to the negotiation table.



US-China talks on again?

Oil rose sharply over the last two days, partially motivated on word that “tariff talks” are on again in the hope of avoiding a trade war that could hurt Chinese demand for crude oil as well as damage the world economy.

     No date has been given for the expiration of this round of talks that will start ahead of a scheduled G20 meeting next week.

     Both countries negotiators are meeting ahead of that to try to hammer out a deal on tariffs before Trump meets with President Xi Jinping of China at the G20.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, June 6th, 2019

Hi to all,



Here’s what I have for price changes in what has proven to be a very volatile week:



*Heating and stove oils to drop by 5.7 cents a litre.

*Diesel to drop by 5.4 cents a litre.

*Gasoline to drop by 5.4 cents a litre.



Market highlights



Tariffs, tariffs, tariffs...

While the long-standing tariff dispute carries on with a quickly approaching deadline for any agreement to settle the argument, the US has also turned to the tariff mechanism as a diplomatic weapon to use against its southern neighbour, Mexico.

     In fact, what Trump has done is cause more world economic worries to add to an already unsteady situation.

     The Trump administration was out this week announcing the use of tariffs to get Mexico to deal with the US immigration issue. For years, illegal immigrants have used the US-Mexico border area as a gateway to the US, and the US wants it to stop, placing several industries there and in Canada, under threat. Oil went lower again as a result.

      Again this past week, the ongoing tariff dispute played downwards on oil prices as time has been ticking away toward the deadline for resolution of the dispute.

      The U.S is promising more tariffs, but China is responding with an economic weapon of it’s own, next to the further imposition of tariffs on US goods. They’re also promising added difficulties in getting rare earth minerals from China to the world markets, promising a technology war at the same time.



US inventories weigh



US inventories showed a build in gasoline last week with the raw liquid adding 2.2 million barrels to supplies, while oil stayed relatively steady, dropping 300K barrels. But the real news may have been with US domestic figures which showed another 100K barrel a day expansion in production with the US now hitting 12.3 million barrels a day.

     Refiner capacity was up to 91.2 percent, but gasoline still showed a build in inventory in spite of the total product supplied.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 30th, 2019

Hi to all,



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



*Heating and stove oil to decrease by 3.6 cents a litre.

*Diesel shows a decrease of 4 cents a litre, and...

*Gasoline shows a decrease of 3.4 cents a litre.



Market highlights



Oil markets have hit a stall...

    Caught between the possibility of a slowing world economy, a new oil glut and an extension of the U.S-China tariff dispute, fears for dropping oil prices far exceed the possibilities of any increase.

     Or, at least that’s the way I see it.

     Evidence south of the border shows another good build in U.S inventories last week, along with growth in U.S domestic output, bringing with it dropping supply fears as oil has no takers and nowhere to go.

     U.S inventories showed a build in crude oil inventories of 4.7 million barrels and remain about four percent above the same period for last year.

     Gasoline inventory also showed a good build of 3.7 million barrels with capacity measured at 89.9 percent. If people aren’t buying with capacity lower than expected, then it’s reasonable to assume that demand is not as great as expected, even in the face of lower production.

      A good measure on where prices may be going as a result, is lower. Demand has to pick up to keep prices elevated.

      But this is not unusual, so, while there may be some hope, I exude caution in the face of dropping prices. It’s not unusual, even after the start of the summer driving season to see prices moderate a little as, sometimes I’ve seen two spikes in prices-immediately ahead of the U.S Memorial Day weekend just passed, and immediately during the start of hurricane season.



Also an important factor in the markets the last couple of weeks is the bruhaha between the U.S and China as talks enter a new phase.

     As China has promised retaliation should additional tariffs be charged to Chinese goods, there comes the possibility that China will slow down any shipments of rare earth minerals needed in technology development, possibly sparking a slowdown in the tech sector.

     Analysts also predict a slowdown in the Chinese economy of tariffs are placed, citing the possibility of slumping Chinese demand for oil as a result. If demand there falters, then oil prices will slip further, along with refined commodity prices.



     That’s it for this week!

      Back in the saddle...



Regards,



George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, April 11th, 2019

Hi to all,



After last week’s wild change in prices, I have to urge caution in the actual price changes this week. I’ll have a solid set of data for next week when things come back in balance as the new dataset gets built up.



Either way, the numbers are still “up” this week regardless.



Here’s what I have:



*Heating and stove oils show an increase of 1.8 cents a litre.

*Diesel shows an increase of 2.3 cents a litre, and...

*Gasoline shows an increase of 3.3 cents a litre.



Continued low refiner capacity still figures this week as it remains below 87 percentage points. Usual for this time of the year is around 92 to 93 percent. That missing capacity is hurting gasoline stocks as we head toward the summer.



     If there’s any other news here, it’s that prices with this week’s increase will still be close to the actual last year for the same time, being one cent over last year’s $1.34.2 a litre. Regulated maximum in St. John’s right now is $1.32.2 a litre.



     Economically, OPEC cuts, including other non-OPEC nations continue to bite into any remaining over-supply issues as Iran, Venezuela and Libya all weigh on production cuts and add their own weight to prices.



     Brent and WTI crudes has increased by close on $4 US over the past week, making acquisition costs a little higher.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, March 28th, 2019

Hi to all,



Here’s what I have for this week’s fuel price changes. Keep in mind that winter blending is still in effect!



*Heating and stove oil show an increase of 1/10^th of a cent.

*Diesel shows an increase of 4/10ths of a cent, and...

*Gasoline shows an increase of 2.8 cents a litre.



Market highlights

With gasoline prices set to rise again this week, I ran a comparison with last year’s numbers to see where we are. Gas prices are just below where they were for the same time last  year with the exception that the Canadian dollar was about six cents less than what it was today, and probably part reason why spot prices are almost the same.  Spot price for gasoline this year for this week’s price change I have at 64.8 cents. Last year’s spot was 65.5 cents.

      Price at the pumps last year, as compared to this week’s if the prediction holds?

$1.33.1 last year versus $1.31.1 later this week.

       Oil on March 27, 2018 was at $68.91 US a barrel for Brent



Tightening supplies versus economy

OPEC and non-OPEC members are still sticking to their guns on maintaining production cuts that amount to 1.2 million barrels a day, and other factors also continue to weigh keeping oil prices up.

     The production cuts agreement is in effect until June, but many believe that deadline will be extended.

     Iran sanctions and falling Venezuelan supplies are also helping to add supply constraints to the world market, even as news of a slowing economy worldwide mounts. Iranian production has reportedly dropped below 2.6 million barrels a day, while Venezuelan production has dipped to just a million a day.

     Word of a possible slowdown was leaving oil in the markets as “mixed” as factory data from the U.S, Asia and Europe was seen as being weak. A weaker demand growth possibility also weighed on oil, keeping any overall weekly increase to oil prices this week as limited.



U.S inventory report

The Energy Information Administration’s inventory report last Wednesday was a little startling.

     U.S crude inventories dropped by 9.6 million barrels, while gasoline also dropped 4.6 million barrels.

     Distillate inventories were also down, but by 4.1 million barrels, lending some upwards support to prices.

     Refiner capacity was recorded at 88.9 percent, still not showing a good uptick on refiners getting back to work.



That’s it for this week!



Regards, to all,



George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, March 21st, 2019

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that winter blending is still in effect:

*Heating and stove oil show a drop of 1.2 cents a litre.

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

*Gasoline shows an increase of 1.8 cents a litre.

Refiners still offline

While refiner capacity is still lower than normal, inventories of gasoline are under pressure as gasoline stocks are not being replaced as readily as they would be if capacity was up.

     With capacity down to 87 percent, there’s still about six percent of production not entering the markets that probably won’t return until refineries come back from seasonal maintenance.

     I’m watching inventory numbers to see when refineries come back, that should bring some moderation to gasoline as the days go on.

OPEC waits until June for further cuts on production

OPEC has announced it will delay a meeting set for April that would have included a decision to extend cuts, to June, adding more speculation that the group is relatively happy with the performance of oil in response to cuts made in December.

     OPEC believes that the cuts are successfully taking a bite out of a world glut of oil and matched with news March 14^th that Venezuelan production dropped by another 142,000 barrels in February, prices have been reasonably stable for the group.

     Venezuelan production is now a rough one million barrels a day.

Distillate prices worth watching

As the International Maritime Organisation deadline of January 1^st, 2020 comes close, it’s worth noting that there is a predicted shortfall of “clean distillates” that could play into the markets, raising prices for distillate product like diesel fuel, heating and stove oils.

New IMO 2020 regulations calling for lower sulphur content in marine diesel fuels is causing some speculators out there to think about the availability of distillates. New regulations are setting new sulphur levels from 3.5 percent down to a half percentage point by January 1^st of 2020 to combat carbon emissions. Some wonder if the diesel, heating and jet fuel markets will also be under added pressure in pricing as a result even though the new regulations affect marine diesel users, potentially the largest user group next to airlines and consumers.

Federal budget goodie

While I haven’t gone fully into the budget, one detail did stand out to me as a consumer: that the federal government will be allowing for a $5000.00 tax credit for electric or hydrogen fuel cell vehicles under the price of $45,000.00.

     Just might be helpful to those of you who may be looking for that “alternative”.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, March 14th, 2019

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that winter blending is still in effect and that it mat throw off the distillate numbers a little.

*Heating and stove oils show an increase of 1.1 cents a litre.

*Diesel fuel shows an increase of 8/10ths of a cent, and...

*Gasoline shows an increase of two cents a litre.

Market highlights

CBS prices drop below Costco-for a short time.

In what may seem to be an oddity to some, for the first time in years, prices in Conception Bay South-went south- to a low of $1.11.9 at the pumps, while Costco, the major St. John’s player remained at $1.12.9 a litre.

        It didn’t take long for Costco to send a message however, that hopefully will be responded to by other St. John’s and northeast Avalon retailers. Costco dropped prices below CBS after a short time to sit at $1.10.9 at the pumps.

        Other retailers are selling at present for $1.17.9 while the majority are at $1.20.9 a litre.

        Keep an eye out for falling prices near you! The regulated maximum is at $1.21.7 a litre. Could mean a savings of up to $8 based on a seventy litre fill!

Venezuelan production falls again

Venezuela continues to feel the effects of economic unrest as crude oil production continues to retreat, this time to fall below 1.1 million barrels a day by another 60,000 barrels as measured for February month.

     The economic unrest has also shut off electricity in some areas of the country, possibly aggravating the situation.

     The figures from S7P Global are the most recent info I have, but OPEC information will also be available in the coming days that will no doubt, highlight both OPEC+ cuts as well as a drop in Venezuelan production.

Iran sanctions starting to kick in

Already under sanction, Iran will most likely start to feel another pinch soon as exceptions were made in exports to other countries as long as those countries took the time to find other suppliers.

     Countries such as China, India and Japan were given upwards of six months to make arrangements from other exporters so there’s an expectation that Iranian production will only start to fall back and start to take a bite out of world supply.

      Expectations are for Iranian exports to fall back from 3.7 million barrels a day in May 2018 to 2.7 million a day by the time sanctions fully take hold May 2019.

US inventories

The Energy Information Administration’s inventory report last week showed a build in crude inventories as some refineries remained down for regular maintenance. Capacity stalled at 87.1 percent while both gasoline and distillates showed a drop, gasoline down by 4.2 million barrels and distillate down 2.4 million.

     U.S domestic production remained at 12.1 million barrels a day.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, March 7th, 2019

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that winter blending is still in effect, so it may throw off the numbers a tad.

*Heating, stove oil and Diesel all show no change this week.

*Gasoline shows an increase of 3.6 cents a litre at the pumps.

Market highlights

U.S inventories surprise

The U.S Energy Information Administration’s weekly report on Wednesday last week surprised the markets a little as crude oil was recorded well down from analysts predictions.

     While most predicted a drop, some around 2 million barrels, the actual numbers showed a drop of 8.6 million barrels.

      The surprise was twice over as gasoline supplies dropped 1.9 million barrels while capacity was recorded at 87.1 percent.

      Distillates dropped 300,000 barrels over the last week.

      The next EIA inventory report is due Wednesday.

U.S-China trade talks continue

The U.S and China tariff dispute may be coming to an end, at least that’s the feeling among some speculators as oil prices responded to the news on Friday.

     Refined prices also responded, with gasoline rising sharply as demand was thought to pick up along with anticipated oil demand if the talks prove successful.

     Any removal of tariffs from Chinese goods coming into the U.S will be seen as a spur on demand that would increase consumption.

Canadian dollar slides again

The Canadian dollar lost ground against the U.S Greenback again this week as oil price gains didn’t spur a rise in the Canuck buck.

     Data on Friday showed a stagnation in Canada’s economy with this country recording the slowest growth in almost three years, partly  due to a downturn in oil prices and activity.

     The Canadian dollar lost an even two cents against the U.S Greenback since last Wednesday.

That’s it for this week!

Regards,

George Murphy

Twitter GeorgeMurphyOil

Price changes for Thursday, February 28th, 2019

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that winter blending may throw off distillate prices a little:

*Heating and stove oils show an increase of 1/10^th of a cent a litre.

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

*Gasoline shows an increase of two cents a litre.

Market highlights

Trump tweet sends oil downwards-Monday

It’s not often you see it, but when the U.S president sees oil rise, and then reacts, it’s amazing to see the markets react as much as they did on Monday.

     Trump tweeted:  “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike-Fragile”

     Oil prices retreated on Monday, losing over $2 US according to US Energy Information Administration data.

 

Added value to heavy crude could benefit this province

A story I read online on Oilprice.com talking about Venezuela’s heavy crude has me thinking...

    The story at the supplied link talks about a possible shortage of heavy crude oils on the markets that could potentially run short as a result of sanctions and political strife in Venezuela.

     But the article also talks about infrastructure issues here particularly in central/western Canada, but not mention the situation here off the coast of Newfoundland and Labrador.

     We’ve got a fair bit of heavy crude off our shores now.

     But remember, with sanctions against Iran, OPEC production cuts and possibly further disruptions coming from Venezuela and a lack of infrastructure to get it out of central Canada, this province may be in line to benefit by the shortage.

     I’ll keep an eye to further moves in heavies...

U.S inventories

U.S crude inventories were up over the last week ending February 15^th with crude adding 3.7 million barrels.

     Inventories of distillate and gasoline both dropped by 1.5 million barrels on 85.9 percent capacity as refineries remained partially shut down for routine maintenance to make ready for spring production of gasoline.

     U.S domestic production added another 100,000 barrels bringing U.S domestic production to an even 12 million barrels a day.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, February 21st, 2019

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that winter blending is still in effect, so the distillate numbers may be off somewhat.

*Heating and stove oils show an increase of 3.4 cents a litre.

*Diesel fuel shows an increase of 3.7 cents a litre, and...

*Gasoline shows an increase of 4.3 cents a litre.

Market highlights

Saudi Arabia expands production...cuts

Surprise!

     OPEC member Saudi Arabia announced last week that it would add another 500,000 barrels a day to cuts already made with other OPEC and non-OPEC nations in a move designed to help support oil prices.

     The cuts would start in March and add to the 1.3 million barrel a day cut agreed to by those enations in November. The surprise announcement helped boost oil prices another $3 US over the past week.

Refiner production down

Ironic as it may be, just as prices for gasoline start to ramp up ahead of the spring run-up to the summer driving season, refiners are shutting down for maintenance and to do the switch from mostly distillate production to gasoline.

     It may be February, but with a 45 day delivery time from the oil patch to consumer, there’s really not that much time before we enter spring, or at least south of the border anyway.

     With speculators eying the summer driving season, it stands to reason the same time every year, that a run-up in gasoline spot prices is also quick to follow.

Eye on Venezuela

US sanctioning of Venezuelan imports of crude haven’t had too much effect on Venezuelan production...yet.

      January production of crude oil was measured at 1.1 million barrels a day, down 59,000 barrels from the month previous, but down almost thirty percentage points for the same time period a year earlier.

      US sanctions have helped support the price of West Texas Intermediate as any sour crude from Venezuela has resulted in replacement from American and other sources.

      I’ll be keeping an eye for any other signs of disruptions here as any may cause further increases in price if supply can’t be met through other sources.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, February 14th, 2019

Hi to all,

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

Keep in mind winter blending, which may throw off the distillate numbers a little!

*Heating, stove oil and Diesel all show an increase of 1.2 cents a litre, and...

*Gasoline shows an increase of 1.7 cents a litre at the pumps.

Market highlights

Saudi Arabia to add to cuts

In an effort to support prices and indeed increase them, Saudi Arabia announced yesterday that it would add more cuts starting in March.

     While previous cuts of 800,000 barrels have already started to hit the markets, the additional cuts will bring Saudi output of crude oil down to 9.8 million barrels a day.

      Saudi Arabia is possibly trying to reach a balanced budget point for the year, but according to the International Monetary Fund, they need oil priced at $80 US to do it.

     Keeping a close eye to this piece of news as the cuts come immediately leading into the spring run-up as we head to the summer driving season.

U.S and China trade talks on again

Trade talks are on again between the U.S and China as we quickly approach their own March 1^st deadline.

     Speculators are optimistic that if tariffs are still in place by that time, then the likelihood of a further slowdown in the Chinese economy will occur, thus driving the price of oil down again as a result of lower demand.

EIA predicts new production in the U.S

The U.S Energy Information Administration predicts that U.S domestic production will hit 13.2 million barrels a day through the year 2020, if the present trend holds out and oil prices stay steady or increase further.

     U.S domestic growth has increased to the point that it is now the highest it has been in recent memory. Since 2008, oil production in the U.S has increased almost six million barrels a day.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, February 7th, 2019

Hi to all,

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

*Heating and stove oils show an increase of 2/10ths of a cent a litre.

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

*Gasoline shows an increase of 5/10ths of a cent a litre.

**Keep in mind that winter blending may throw off the distillate numbers somewhat.

Market highlights

Keep watching Venezuela

The political situation in Venezuela is being watched closely as political protests continue. But the real possibility of revolution in Venezuela still weighs on the markets, even though sanctioning of Venezuelan crude has been put in place.

      While sanctioning keeps their crude out of the U.S, it also means that the U.S has to look for other sources of crude oil to replace supplies lost from the South American country.

      U.S domestic production is believed to be one real possibility as crude prices or West Texas Intermediate have risen more noticeably than Brent. Brent prices, in the meantime, have risen in recent weeks also, but are probably more influenced by upwards pressure from OPEC Plus (OPEC and non-OPEC producers) cuts that have nnot really taken a full bight of the markets as of yet.

What’s holding oil back?

With all the word on a possible drop in exports from Venezuela, it’s the weight of disturbing economic news that also permeates the markets.

     Economic growth just about stagnated in the Eurozone during January month, sending ripples through the markets and signifying that all may not be well with projected demand that would help bolster prices.

     It was a slowdown in the Chinese economy last month, but any signals from Europe would only bolster the thought that any slowdown is underway.

Electric vehicles to impact oil?

I remember a number of years ago, King Fahd I think it was, said that the Kingdom had fifty years more to sell oil and make whatever it could from the riches it had been given.

     His prophecy may come true.

     With a caveat about rare earth minerals, the Bank of America has stated that the advent of the electric vehicle will kill overall demand growth for crude oil by the year 2030.

     That has huge implications as rare earth metals such a lithium and cobalt, predominant metals in electric vehicle batteries are only recently being explored. Countries in Central America have the most promise, says the bank, and if more is found, then the predicted growth in demand may indeed falter. Oil demand itself may peak amidst predictions of a collapse in demand growth, and may in fact drop off again as other alternatives besides crude oil become readily available to world consumers.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, January 31st, 2019

Hi to all,

Here’s what I have for this week’s price changes. Keep in mind that winter blending is still in effect and that may throw off the distillate numbers slightly!

*Heating and stove oil to drop by 1.9 cents a litre.

*Diesel fuel to drop by 1.5 cents a litre, and...

*Gasoline to drop by 3.5 cents a litre.

Markets were topsy-turvy this past week as weak economic data was mixed with inventory numbers that sent speculators wondering where it would all end.

     Inventory data this past Thursday suggest that demand for gasoline is off for now, but margins are still good for distillate fuels like heating, stove oil and diesel. With those fuels still in a high demand phase with colder weather in central regions of North America, refiners are still operating at just shy of 93 percent capacity to take advantage of the situation.

     Crude oil is still also gaining inventory, with crude adding eight million barrels and gasoline adding another 4.1 million to an ever expanding inventory ahead of the spring run-up in prices.

     In spite of colder weather, particularly in the central US and Canada, distillate inventories only dropped 600,000 barrels on the week.

     In the meantime, big troubles may be on the way for Venezuela politically, but oil increased today as the U.S placed sanctions on the Venezuelan state-owned oil company Petroleos de Venezuela SA.

     Increasing violence and tensions are mounting, adding the possibility that supply disruptions could result if a shutdown to the oil industry occurs.

     Venezuelan production has dropped to close to 1.1 million barrels a day, and could drop further if violence ensues in the South American country.

     Still no word from the federal Competition Bureau in Ottawa as I filed a complaint regarding the sale of Ultramar gas stations to Irving some time back.

     Places such as Conception Bay South have lost the competition between companies that I believe is costing them lower prices at the pumps as of late. And with the added closure of a Canadian Tire gas bar here beside the Ultramar station , consumers here are pretty much left with three of the larger companies who’s prices have crept up and left one company in more than a dominant position, I believe, in the CBS market particularly.

     The loss of the ValueMax program along the shore, not to mention the benefits of Canadian Tire has meant that consumers don’t have as much say on lower prices. CBS gas station prices are now a few pennies above most prices in St. John’s, a condition that hasn’t happened in years.

      Prices here are still somewhat below the regulated maximum, but not as much as they used to be. I’ll let you know if I do hear anything back...

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, January 24th, 2019

Hi to all,

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

*Heating and stove oil shows an increase of 1.7 cents a litre.

*Diesel fuel shows an increase of 1.4 cents a litre, and...

*Gasoline shows an increase of 1.9 cents a litre.

Keep in mind that “winter blending” may throw the distillate numbers (heating, stove and Diesel) off slightly.

Market highlights

Oil climbs this week, but...

Oil prices increased this week as OPEC cuts started to take hold of the markets, but it may have been short-lived.

     Disappointing economic news from China, along with fears of a worldwide economic slowdown bordering on recession sent oil prices lower today after reaching a two month high of $63 and change on Friday.

      Chinese expansion was reigned in at 6.6 percentage points in 2018, far off from a “usual” nine percent plus. It’s the lowest read on Chinese growth in thirty years.

       That wasn’t the only piece of news that sent oil lower today. The International Monetary Fund, or IMF, also said that projections for world economic growth are lower than previous predictions setting the new number at 3.5 percent from the 3.7 percent previous estimate, indicating a lower demand for crude oil and it’s refined products.

US inventories

US inventories recorded a drop in crude oil stocks for the first time in weeks as crude supplies declined by 2.7 million barrels.

     Gasoline inventories were up by 7.5 million barrels, while distillate stocks increased by three million barrels.

     U.S domestic growth was up another 200,000 barrels with production there now sitting at 11.9 million barrels a day.

Rig count lower

US drilling rigs operating in the field was down again last week as the rig count dropped by 25 according to Baker Hughes weekly count.

     There are now 1050 operating drill rigs in the U.S now, a full 114 more than the same week last year. 

     But with the prospect of oil heading lower, there is a chance that we could see more rigs fold up operations again, sending U.S domestic production lower, and the world economic prospects at the moment aren’t all positive.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil

Price changes for Thursday, January 17th, 2019

Hi to all,

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

*Heating and stove oil to increase by 3.4 cents a litre.

*Diesel shows an increase of 3.6 cents a litre, and...

*Gasoline shows an increase of 6/10ths of a cent a litre.

Market highlights

Gasoline prices remain on the moderate side as inventories of crude oil still being soaked up by refiners churn out added gasoline stocks that simply aren’t being used. While refiners are enjoying good margins for distillates like Diesel and heating oils, they are also turning out gasoline that for the moment faces no demand pressures like the distillates do. Gasoline spot prices have remained almost steady to a couple of tenths as inventories show lots on hand in the low demand season.

     Margins are also healthy as new regulations around distillate fuels will be coming into force in 2020 as rules around sulphur content take hold. As these new regulations take hold for all distillate users, some are saying there could be a market shortfall of distillate fuels that will increase it’s value as 2020 gets closer, and that is also part reason why we’re seeing elevated prices for those fuels.

U.S inventories

Inventories meanwhile, also are enjoying the upside as gasoline gained 8.1 million barrels in the latest U.S Energy Information Administration report last Wednesday. Refiner capacity remained well above 96 percent and distillates also saw a massive gain of 10 million barrels.

     U.S domestic production increased again, but this time by a barely noticeable two thousand barrels a day, so essentially remaining close to 11.7 million barrels a day.

     The U.S rig count also dropped by seven rigs as the possibility of lower oil prices may be taking a bite out of working rigs. There are 1138 rigs operating in the U.S up to January 10^th.

That’s it for this week!

Regards,

George Murphy

Twitter: @GeorgeMurphyOil

Price changes for Thursday, January 10th, 2019

Hi to all,

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

Distillate prices are subject to “winter blending” so they could potentially be off slightly.

*Heating and stove oils to increase by 1.9 cents a litre.

*Diesel fuel to increase by 2.1 cents a litre, and...

*Gasoline to increase by just 6/10ths of a cent a litre.

Market highlights

Oil rises for the first week of 2019

It is usual for market speculators to look at the first five days of any New Year and make predictions that the year in question will be a good one.

     If that is the case, then the first five days of trading this year may be an indicator that oil prices will rebound somewhat, probably to within OPEC’s target range of $70 US a barrel.

     With oil rising for the first five days, market speculators have sensed that OPEC’s round of cuts will soon take hold and are seeing the December cut in production as being positive for rising oil.

     Markets responded positively to news that OPEC members successfully lowered production by 530,000 barrels a day for the month of December.

Canadian dollar rises

The Canadian dollar increased roughly  three cents against the U.S greenback over the last nine days with the dollar trading at $1.3638U.S on the 28th of December to today’s $1.3293.

      With the rise in the dollar, consumers gained a little with refined product prices. For each penny the Canadian dollar gains, the rough equivalent of close on three quarters to a full penny is saved by consumers.

U.S inventories tell a story

U.S refiners may be looking at adding more refiner capacity just to “soak up” added oil inventories in recent weeks.

     With crude inventories expanding to 441 million barrels in the U.S, almost eight percentage points over their own five year averages, refiners have turned up production to try to bring the crude levels down.

     But are they succeeding in supporting prices?

     While oil prices have increased, West Texas Intermediate prices have not increased at the same rate as Brent prices, with the differential between the two expanding by $4 US with Brent rising faster than WTI.

     Refiners are left in a quandary, that if they can’t export enough to the outside, then they are left to try to refine it to remove it from inventory.

     The problem they have this week in the numbers is that, while crude inventories remained steady, gasoline showed a massive gain of 6.9 million barrels, while distillates showed an increase of 9.5 million barrels. Another such build as this week showed, anything else added may complicate inventories as a consideration to the sell price to the end user in spite of rising oil, and that squeezes margins.

     Refiner capacity was recorded at 97.2 percent with the data for the week up to December 28^th.

      U.S domestic oil production also remained steady through the Christmas holidays at 11.7 million barrels a day.

      That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil