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Tuesday, July 28, 2015

Price changes for Thursday, July 30, 2015

Good evening all,

Here's what I have for price changes this week;

Heating and stove oils predicted to drop by 1.25 cents a litre.
Diesel to drop by 8/10ths of a cent, and...
Gasoline to drop by 3.2 cents a litre.

Market noise
Bank of America on oil
Bank of America is projecting more weakness for oil to come in the third quarter of this year. Expectations of the company show Brent prices to average $50 US from their previous estimate of $54 US  a barrel. Prices for WTI (West Texas Intermediate) were expected to average $45 US a barrel from their previous estimate of $50 US.

US domestic production seen rising
US drillers added an unexpected 21 drill-rigs to the markets this week. The move was a surprise, but shouldn't have been with investors looking for a return on their investment as well as expectations from cost cutting measures. Those measures included everything from salaries to "re-fracking" previously producing wells to get new production. The move removes previous drilling costs with the assumption being that the well is already done, so the frack can occur. Canada added eight rigs over the same time frame last week.

Brent prices to falter amidst market turmoil?
Oil prices pushed lower this last regulatory session as market unease in China played heavily through the week and continues to do so. As stated last week, there were considerable debate from market speculators about the longevity and stability of the markets in China. While growth has massively slowed, stocks there continue downwards, increasing doubts of overall Chinese oil demand. As well, all bets are off now in how much oil Iran can add to the markets, considering the world situation with oil prices. Speculators feel that, with massive world inventories of oil out there, Iran's addition of oil to the pot will only hinder the glut problem on the markets, making it less likely for oil prices to recover anytime soon. Add to that problem a simple fact that, with Iran's entry back into the markets expected soon, competition amongst oil producers will only increase, with that likelihood that everyone is going to be forced to compete for market share.

On this date
Brent oil price on July 29, 2014?...$106.47 US a barrel
Those were the days, my friend!...

That's it for this week!

Regards,

George
Twitter @GeorgeMurphyMHA

Tuesday, July 21, 2015

Price chenges for July 23, 2015

Hi to all,

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

Heating and stove oils to drop by 1.4 cents a litre.
Diesel fuel to drop by an even penny, and...
Gasoline to drop by 2.1 cents a litre.

In the markets
Iran nuclear deal vs production
The nuclear deal with Iran has speculators more than skeptical and divided over how fast the OPEC country can overcome sanctions and get its oil industry moving again. While some speculators said last week that Iran would not be able to produce more than 500,000 barrels immediately for the world market, others are saying they can rebound production in less than four months, rather than the additional 12 months predicted earlier. It's going to be a "wait and see" approach that market speculators are going to have to take. Nothing bites the oil markets like reality!

August buying contract
Now, you'd hardly tell by the weather, but it should be a clue as to what's happening with gasoline prices this week. While gas prices are predicted to be down this week, it's a sure sign that we have to be close to the end of the August buying contracts. That means that the focus will shortly turn towards the distillate group of fuels. It's well known in the markets that, from the time of initial purchase of crude oil to the delivery of refined product, takes a rough forty five days to get to the consumer. Assuming that, we're now looking at speculators starting to turn their eyes later this week to distillate fuels like heating, stove oils and diesel fuel. The focus off gasoline this week with a slight drop in prices may simply be that; while the summer has not gone yet, the opportunity to make a buck in the markets off refined gasoline has come and gone. See what happens with gasoline for the rest of the summer, but futures prices are taking a dip as we get closer to September/October.

Canadian dollar drops
It should be no surprise that with the drop in the Canadian dollar against the US greenback as a result of the drop in interest rates last week, you could have been paying a lot less for gasoline than what I have here for this week. As compared to a month ago, the two cent drop in the Canadian dollar against the US dollar has cost you close to two cents t the pumps. What is showing as a 2.1 cent drop should be four cents this week, but thanks to the "wisdom" of the bank of Canada, its now a little harder for consumers to recover from this "recession". The drop in the dollar just doesn't affect fuel. It also hits consumers for anything, like food, that comes from the US.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Tuesday, July 14, 2015

Price changes for Thursday, July 16, 2015

Hi to all,

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

Considering all the moves in the international political arena, it may not be a lot of action in the refined commodity department, however!

Heating and stove oils show a drop of 1.8 cents a litre on the way.
Diesel fuel shows down by 2.1 cents a litre, and...
Gasoline shows an added 9/10ths of a cent.

Market news

Greece and the Euro

Greece continues to play in the markets, but as much as what people would have figured. With such a low gross domestic product and already an unemployment level that's pretty high, some are saying that Greece has played it's card on oil already. Greece amounts to a much lower GDP than China, which has it's own issues with the stock markets. There, the Chinese government has ordered government run agencies to begin buying stocks of private companies in order to maintain their value and help keep some semblance of order in trading. Some analysts are saying that we can expect to see another thirty percent devaluation of stocks there before stability reached their own markets.

Iran deal
While a deal over Iran's nuclear program has been signed, don't expect to see Iran's oil output to hit an added 1.8 million barrels right away. Analysts say that due to aging infrastructure, Iran can only produce an added 500,000 barrels a day more upon lifting of sanctions, and those sanctions have to be tested before they're lifted. Analysts also say that Iran will be able to add another 500,000 after six months has passed. But the kicker here is that Iran has over 30 million barrels of crude already in floating storage ready to hit the waves as soon as word is given. That's compounded by a total "floating" figure of 174.8 million barrels already waiting to go.

Iraq, Saudi Arabia continue to break production records. Libya back?
Word from Iraq shows that country increasing production again in July to amount to 3.86 million barrels, while it's neighbour, Saudi Arabia hitting production daily at 10.6 million barrels in what I believe is a move by those OPEC countries to stymy the revival of US domestic production. That's another reason why oil showed some retreat over the past week. To add to world glut woes, two of the fighting factions in Libya have reached an agreement to allow oil exports there to resume. Amongst the bloodshed, Libya has been exporting a rough 800,000 barrels a day through two coastal ports previously shut in.

Canadian dollar
The Canadian dollar against the US greenback lost another penny in a week that saw oil prices on the retreat again, albeit to the benefit of the US dollar. Whenever I see a retreat in oil, it's usually a time for speculators to invest in the US dollar, and that lowers our own, considering we have a dollar closely tied to performance of natural resources like oil.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA 

Tuesday, June 30, 2015

Price changes for Wednesday, July 1st, 2015

Here's what I have for this week's price changes. This week, prices will be adjusted at midnight tonight as a result of the Canada Day holiday.

So really, consumers and the media get this notice just ahead of the price change itself!

Here's what I have for this week:

Heating and stove oils to drop by 27/100ths of a cent a litre.
Diesel to drop by 3/10ths and...
Gasoline to drop at midnight by 1.4 cents a litre.

A potential deal with Greece over it's debt may be at hand, and that helped to support oil prices in today's trading. Oil traded just slightly lower on the fact that there was a potential up to notice-time, of a Greek default on debt payments. Most European markets, while still down today, were more or less after insulating themselves from that possibility as a result of Greece's last troubles back in 2008-09.

In the meantime, there could be some more troubles with Brent prices. This time, news out of Antwerp is telling of steady builds in overall Brent inventories that may put those oil prices at risk of slipping. Capacity in Europe for oil storage is also starting to show issues in other major European regions as well as overall crude oil inventories keep climbing. In the meantime, oil in floating storage in the Arabian Gulf and centres close-by, show another climb, with oil inventories hitting 183.7 million barrels.

Closer to home, in the US, we could be witness to a bear awakening as US rig counts surprised everyone with the addition of TWO rigs to add to the weekly rig count. That's the first increase in the number of operable rigs in the US since December, 2014 when oil prices initially collapsed! Seems that cheaper operational costs may be factors in bringing some rigs back to life, but could also be a straw that broke the Saudi back spurring them to add production to stem the flow of US oil.

We'll see what happens there!

That's it from me this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA 

Tuesday, June 23, 2015

Price changes for Thursday, June 25, 2015

I wanted to say first off a true heartfelt "Thank you" for all the kind words. I'm looking forward to finishing my term in November and getting more time with family. I think it's them that needed a break, so, I'm going to give it to them...

The numbers for this week all point down. Go figure...I pack it in and the price of gas drops!...

I should quit more often! Here's what I have for this week's price changes:

Heating and stove oils are pointing down by 4/10ths of a cent.
Diesel is also pointing down, but by a half cent, and...
Gasoline shows a drop of 2.5 cents a litre.

The Canadian dollar remained relatively steady against the US greenback this week.

OPEC production is expected to pick up again in the coming weeks that may throw a wrench into the oil markets and potentially send some prices down lower. With Iran nuclear talks set to begin, speculators are widely expecting that Iran, if sanctions are lifted, will begin an immediate climb to an output level not seen since 2008 when sanctions were tightened. Right now, Iran is pumping out 2.8 million barrels a day, but is widely expected to hit 4 million barrels if sanctions are removed.

Libya officials are saying to expect that country to start exporting oil again shortly. Government officials predict that output there will hit 800,000 barrels a day by July in a move that could add more oil to an already over-supplied European market.

Saudi Arabian officials are saying that, if the world need arises, they can boost production capacity by between 1.5 and 2.0 million barrels a day, remarkable considering the country already put out 10.3 million a day last month.
 

I'll leave it at that for now!

My regards, and again, thanks for all your thoughts and prayers!
George Murphy,

Tuesday, June 16, 2015

Price changes for Thursday, June 18, 2015

Hi to all,

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

No changes expected for heating and stove oils. Numbers show close to zero predicted, but remember my margin for error of 3/10ths of a cent a litre.

Gasoline shows an added 3.1 cents a litre coming for Thursday.

Well, you might be thinking "every excuse in the book to raise prices" and you may be right, but there is some evidence out there to support why speculators are starting to pour some dollars back into the gasoline trading market again.

Demand is up, plain and simple...

Here's my read:
With gasoline being consumed at a good rate now, because of the summer season, no doubt, I'm seeing refineries running at a little better than 94 percent of overall capacity. I haven't seen a number as high as that in a long time, but it tells you exactly how much gasoline is being used. Right now, in the US, demand has outpaced itself and has grown an added 1.1 percentage points in the last four weeks alone. They're consuming gasoline in the US at a remarkable 9.35 million barrels a day, while capacity has only allowed for 9.1 million barrels.

While OPEC has again produced at another record number, the oil they had in floating storage is starting to move lower. Latest numbers I have show a drop of close to 20 million barrels from just last week. Is this a sign that someone is buying the stuff, or is this normal in the rotation of their inventory? I'm keeping a close eye to this one.

Water shuts down most refineries. That, and a lack of electricity. Don't expect the remains of tropical storm Bill to affect the markets too much. When it landed on part of the Texas coastline yesterday, it landed in an area far from the major area for refining in the US. Most refining facilities are centered close to the Louisiana border with Texas, the same area that got pounded with heavy wind and rain from hurricanes Rita and Katrina in 2005.

I'll leave it there for this week!

Regards to all,

George
Twitter @GeorgeMurphyMHA 

Wednesday, June 10, 2015

Price changes for Thursday, June 11, 2015

Sorry I'm late, but computer issues at home didn't allow me to get in and post last night!


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

Heating and stove oils show down by 2.0 cents a litre.
Diesel shows a drop of 2.2 cents a litre, and..
Gasoline shows a very modest drop of just a half penny.



Better than nothing, I guess...


The Canadian dollar remained relatively steady against the US dollar this week against the volatility of oil. Numbers for oil were simply all over the place with rapid movements up and down.


Part of the reason for oil's increase the past two days itself may seem odd. While industry insiders have been saying that OPEC is pumping record amounts to maintain revenue, Saudi Arabia itself responded on this rare occasion to tell the same industry insiders that they were pumping record amounts in order to meet demand from their clients. Oddly enough, the numbers for oil in floating storage seem to show something happening with all that extra oil the Saudi's have on hand. Floating storage numbers showed a drop of close to nine million barrels this week to sit at 173 million barrels.



Unusual in itself, that one got the markets moving amidst speculation that the Saudi's may be right. An open question in itself: While the Saudi's are supposedly pumping record amounts, if demand does pick up, will there be enough capacity for Saudi Arabia, or OPEC,  to meet it?


Speculation as well over Iran being able to enter the markets with an added 1 million barrels a day. That was the number a lot of insiders were kicking around as a possibility that an agreement would be reached over access and monitoring of Iran's nuclear program. The details of the agreement were supposed to be finalized this week, but politico's in Iran are worried over sovereignty and security issues with monitoring of sites not previously agreed to.

Finally, while the Saudi's continue to pump to knock out smaller US producers, their program seems to be working. But here in Canada, it seems smaller producers continue to come back online. Due to the lower Canadian dollar, one can only speculate, but rig counts in Canada climbed another 18 rigs last week while the US dropped 10.


I'll leave it at that for this week!

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA