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Tuesday, November 25, 2014

Numbers for Thursday, November 27, 2014

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

Heating and stove oils show a drop of 1.27 cents a litre.
Diesel shows down by 1.5 cents, and...
Gasoline shows a drop of just 6/10ths of a cent a litre.

Keep in mind that there's a lot of volatility out there and that the winter blend is in for heating and Diesel numbers. They may be off somewhat.

The Canadian dollar actually gained about a half penny against the US dollar the last week. And with spot prices for all fuels measured showing hardly any change, that was the difference.

However, today, while the dollar gained slightly, we also saw the start of another move downwards for oil. It could be the start of what some are predicting as a move down to $60 US a barrel for West Texas Intermediate.

In the meantime, OPEC meets on Thursday. My feeling is that they have no choice but to put a symbolic cut to production in place. If they drop production, they risk losing important customers for their oil amid growing American US domestic production now pegged at 9.1 million barrels a day.

Watch the business news on Thursday for what OPEC does. I'm still sticking to a cut of 500,000 barrels a day by OPEC.

That's it for this week!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Tuesday, November 18, 2014

Numbers for Thursday, November 20, 2014

Hi to all,

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

Heating and stove oils projected to drop by 2.96 cents a litre.
Diesel shows a drop of 1.9 cents a litre on the way, and...
Gasoline shows a drop of 2.4 cents a litre.


For the previous two weeks, I have been out a little, especially last week with my numbers down while an increase came into effect. I'll blame it on volatility out there. While it was down two weeks ago, it was down much further than expected, and I'm thinking the difference added up to an increase for last week instead
.
But it looks like things will be back on track for this week again.

US domestic production of crude oil continues to set records, with the numbers amounting to nearly 9.1 million barrels a day being pumped out of the ground in the US. That's offsetting any possible cut that OPEC may be thinking. We'll find out later on the 27th if OPEC will institute any cuts, but with US domestic rising, it's not likely they will at the risk of losing market share.

At least that's the talk out of the Middle East.

I'm thinking that OPEC will make a move, but not a substantial one. I think right now they'd all be happy just to stop the fall of oil and offset any US domestic production that may come on line to add to the world glut.

George is guessing OPEC will cut by 500,000 barrels a day to try to stop the slide.

Any takers?...

We'll see what happens!

That's it for this week!

Regards,

George
Twitter @GeorgeMurphyMHA

Tuesday, November 11, 2014

Numbers for Thursday, November 13, 2014



Hi to all,

Hope everyone had a great Remembrance Day and that you all got out to our respective communities to help remember the sacrifice others made for us...

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

Heating and stove oils to drop by just 1/10th of a cent.
Diesel prices to increase by 4/10ths of a cent a litre, and...
Gasoline to drop by 7/10ths of a cent a litre.

Keep in mind that my heating and Diesel numbers may be off somewhat as a result of winter fuel blending!

OPEC meets November 27th in Vienna
Surely we'd all like to be a bug on the wall at the next meeting of OPEC on November 27th when they discuss the possibilities of making production cuts to try and support the price of oil.

I know I would!

OPEC members Saudi Arabia and Iraq aren't all that fussy about making production cuts it seems, and it's doubtful if OPEC as a group would institute such a measure that would bring trouble for some of the member nations. Just think about Venezuela having to take a share of the cut with that country already facing a heavy debt and running close to a 60% inflation rate! With US domestic producers pounding out product and looking to export, it may be a new reality for OPEC that they'd be looking at market competition. According to what I'm hearing, they may take the new price of oil as the new normal for the oil markets as a result. Funny as it seems, but OPEC might not be able to compete for a long time to come.

Lower oil good for North Atlantic Refining
Here? It has to be good for our local refiner North Atlantic! One of the largest problems they had to deal with was the rising price of crude. Now that oil is a little cheaper for them, it helps the survivability of the refinery. Gas is cheaper than what it was a short time ago and crude acquisition costs are down as well.

That means jobs on an improved bottom line.

By the way. Brent closed at $80.35 US today.

That's it for now!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Tuesday, November 04, 2014

Price changes for Thursday, November 6th, 2014

Hi to everyone,

Here's what I have for price changes this week. Keep in mind that my heating oil and Diesel numbers may be off somewhat as a result of winter blending!

In the meantime, not too much in changes this week, namely be cause of the poor performance of the Canadian dollar against the US greenback. Our "beloved" loonie lost a good 2.6 cents against the US buck in the last six days and that's accounting for a lot.

Heating and stove oils show an increase of 55/100ths of a cent a litre.
Diesel shows an added 1.3 cents a litre, and...
Gasoline shows a drop of just 9/10ths of a cent a litre.

An important note here with the numbers.
While there's not much of a drop to be shown with distillate prices, it's important to remember that we are in the winter demand season. In spite of lower oil, there has been limited impacts on both heating oil and diesel prices. Draws on US inventory aren't helping the matter.

Gasoline a little different as demand remains flat, even with lower prices. refiner capacity is a full seven percent below the normal due to refiners switching from gasoline refinement to distillates. When production resumes, this should add to inventories and bring prices down further.

In the meantime, I'm looking with interest at tomorrow's inventory report from the EIA, sometime around noon release on that.

Lastly, on gasoline.

Spot prices reflect the start of what may come next week. While they averaged about 67 cents this last session, today ended off about 65 cents. If that keeps going like it is, look for about another two cents "guess-timate" for next week to come.

I think the Saudi's are beginning to go for broke with the discounts on oil they're offering their US customers. The advent of huge growth in US domestic production is finally putting the pressure on OPEC pricing and the Saudi's are forced to discount to maintain their market share. Mind you, we're seeing the benefits of that and also witnessing some dissent amongst other OPEC producers who think that Saudi Arabia alone should be forced to take the majority of any production cut, should OPEC implement a cut on November 27th.

I won't overload you all with what I'm thinking is going to happen over the next few weeks. If you have any questions, drop me a note.

That's it for this week!

George
Twitter @GeorgeMurphyMHA

Tuesday, October 28, 2014

Price changes for Thursday, October 30, 2014

Hi to all,

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

Heating/stove oils show a drop of 1.7 cents a litre.
Diesel shows down by a penny, and...
Gasoline shows a drop of 2.1 cents a litre.

The trading in oil has been a little "slick" if I can say that. I'm noting a pattern where the numbers seem to go against the real news that's out there. It's almost like a few people out there are putting in huge bids for oil just to try and support the price, hoping for the bad news to hit so they don't have to put more in.

Last week's increase in inventory should have sent oil prices well down, but they didn't. After bouncing down a few pennies, they more or less have stabilized around $81 and change US for West Texas Intermediate. You would have expected lower, considering the huge build the week previous to that. While there's a chronic sign of huge supplies out there, prices haven't fallen to match.

It's worth keeping an eye on the numbers to see how the markets react tomorrow.

Either way, consumers should expect another five cents off gasoline prices the next couple of weeks as spot prices remain about 16 cents a US gallon above what the "futures" numbers are saying, provided the markets remain steady. We'll keep an eye to that one too and see if it transpires.

That's it for this week...

Regards,

George
Twitter @GeorgeMurphyMHA

Tuesday, October 21, 2014

Numbers for Thursday, October 23, 2014

Hi everyone,

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

Not too much to report here, but refined commodities prices still remain low on the MYMEX for the week, albeit not as low as what one would have expected, considering the slight rebound in overall crude oil prices. Futures prices remain a rough 12 cents a US gallon lower than spot pricing that I track, so there's still an "unknown" amount coming down the pipes somewhere yet to come.

Heating and stove oils show a drop of 1.53 cents a litre on the way.
Diesel shows down by a penny, and..
Gasoline is down just 8/10ths of a cent on a litre.

It's still up in the air on exactly how much oil will still drop, or if it is going to drop further. Some improvement over China manufacturing numbers helped to support oil prices the last two days, but the economic situation in the European Union still remains at question. Add to this the latest EIA inventory report tomorrow. If there's a draw of oil against US inventory, look for West Texas prices to increase. The same would go for refined commodity prices. My "fear" is that consumers saw cheaper prices overall at the pumps the last week or so, and probably consumed enough to cause a kick-back in inventories this week.

We'll see what happens around 12 noon Wednesday, see if this string of price drops continues!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA 

Tuesday, October 14, 2014

Numbers for Thursday, October 16, 2014

As promised, the final numbers for Thursday's price changes:

Again, keep in mind that heating and diesel numbers may be off because of the winter blending of fuels!

Heating and stove oils to drop by 2.56 cents a litre.
Diesel to drop by 2.7 cents a litre, and...
Gasoline to drop by 6.8 cents a litre.


These numbers are very volatile, but downwards!

OPEC may not cut, but will probably end up competing against each other for market share. That may cause them to split. Venezuela is wanting a meeting to institute cuts to help support its own treasury, but others such as Algeria are not agreeable to those cuts and would rather ride out the storm. It's interesting to watch!

In the meantime, US domestic production is again playing a huge role with the EIA again measuring production reaching 8.83 million barrels a day. I saw figures last week measuring output at 9.01 million barrels. The truth probably lies in the middle somewhere.

While all that goes on, expect prices to continue to decline to the consumer over the next week at least! I'll keep you up to date!

Pass the word everyone! Prices are going down!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA

Timing is everything...

Whenever I get the chance to speak in the House of Assembly, I do. I do it with gusto, passion and my constituents in mind.

Such was the case when I rose in the House to speak to the budget in 2012. The occasion was to debate government's notion to budget oil at $112 US a barrel.

I remember it well, although in the debate, it was only afterwards you realize that sometimes timing is everything, and that even my own timelines can be set off somewhat. I worried that day over the huge expanse of US domestic production and what it could mean for the province if it kept on the path of budgeting based on future oil output and pricing projections.

It would potentially cost us dearly...

Now, mind you, any government can budget around those numbers and the expectations of the oil markets, but to maintain spending at those levels may be foolhardy. Services like healthcare are still in growing need, schools still need to be replaced and roads built. Expectations are still there...

I argued that day what was starting to happen: that US domestic production of oil was fast increasing to the point that OPEC influence on price would be affected and that we may not see the trend until it hit us where it hurts. My "game day" scenario saw us not budgeting on anything over $100 US a barrel.

In the Muskrat Falls debate later that year in December also saw me using the same points, that we would be better off realizing that the slow climb to Nalcor's $145 US a barrel would be a pipe dream. I argued the case for natural gas onshore for electrical generation, taking stranded gas offshore, and using that also as a source of revenue. Others were shipping and exporting LNG, so why not us, and generate needed electricity as well at the same time?

Again in 2013 budget debate, I argued that Brent should be priced between $95 and $100 US for the fiscal year ending in March. Not a cent above, because of the same US domestic production figures that would affect the markets. US domestic would affect the markets so much, and so much oil would be available, that the price of Brent would be dragged to a lower selling point...

Now it has come to fruition, and there's not a darn thing even OPEC can do about it.  If they cut output, they deprive their citizens of revenue and work. They run the risk of further Middle East instability with OPEC stability itself at question.

Countries worldwide have their own domestic supplies spelled out for them in deep underground shale reserves, and the final arbiter to future prices may be about to speak in the form of China and India. For recently, I think it was back in March of 2012, China entered into an exploration and development agreement with Royal Dutch Shell to develop it's own shale reserves. If you consider that the present US shale explosion only started in 2005, there may be very little time to keep China as a customer for oil and to keep it as an important measure in determining what's left of theories expounding world oil prices. For if China does develop both oil and gas reserves, it would also have broken part of its own dependency on Russia and others from OPEC countries for its important energy needs, and that important factor in "supporting" oil prices removes itself from the markets. And at development costs that range $19US per well, how can they say no?

I'll give China five years to come on-stream.

The same can be said for India, who sit on massive natural shale gas reserves in their northeast region...

Nothing like "self-sufficiency" and a chance at breaking OPEC dependency!...

Are witnessing the death of high oil prices? Other factors have yet to play in the face of the present glut of product. Things like shutting down exploration and development of present finds, changing geo-political situations or economic slowdowns that have yet to play through.

What you're witnessing, as far as I'm concerned, is Big Oil getting a dose of reality; that others outside can now call the shot and determine what prices are good for economic development and consumers alike. It's something that's been missing from the markets since OPEC formed all those years ago, and a lesson that OPEC won't soon forget! Competition...

Nor should we forget.

Just don't lose sight that we're still going to need to develop alternate sources of energy that can completely remove us from fossil fuels. Just because we don't have to pay higher price for oil for a time to come doesn't mean we should lose sight of that. We need alternatives more than ever...

I'll be back later tonight with a post with this Thursday's price changes. Look for all numbers to be down!

Regards,

George Murphy
Twitter @GeorgeMurphyMHA