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Tuesday, February 09, 2016

Price changes for Thursday, February 11, 2016

Good evening everyone,

Here's what I have for this week's price changes, keeping in mind winter blending that may throw off the heating oil and diesel numbers a little.

*Heating oil shows a drop of 1.3 cents a litre....
*Stove oils show down by 1.3 also.
*Diesel shows a half penny drop, and...
*Gasoline shows a huge drop of 4.7 cents a litre.


*As predicted a few weeks ago, it certainly appears that a price war of sorts will start up against oil prices with most OPEC nations raising production in January month by an added 280 thousand barrels a month. Current production was a total of 32.6 million barrels a day. That hit Brent prices particularly hard today as most of this production would most likely be sent to the European markets. Keep reading...

*Still no real sign of a drop in US domestic production after a slight drop over the last six months. US domestic production in January remains at a  stalwart 9.2 million barrels a day. Pretty important signal to Saudi Arabia that they're going to have to drive prices lower, if they hope to knock out US domestic production as an important player in world oil prices. That, and compete directly with US customers for crude oil.

*The International Energy Agency is warning that low prices may continue for some time yet as all countries currently are producing 1.75 million barrels a day more than what the world actually needs. That's up another 250,000 barrels a day from their previous needs of world demand.

*Add to the mix, Kuwait as another country and OPEC member setting themselves up to produce more crude oil in the final quarter of 2016. They're set to increase production from 2.5 million barrels a day to 3.15 million by the end of the year.
Talk about exacerbating the problem!

*Finally, I'm surprised to hear that Nalcor will be looking for an increase to allowable expenses for added burning of oil in Holyrood! All things considered, prices for #6 oil that they use is now well below what they adjusted for months ago when we received a drop in electricity rates. Hopefully, the consumer advocate will defend this "ask" on the part of Nalcor and champion a drop in electrical rates as a result of the drop in price of the oil they use!

That's it for this week!


George Murphy
Twitter @GeorgeMurphyOil

Wednesday, February 03, 2016

Of market plays, reality and other oily bits...


You must be wondering exactly what goes through an oil speculator's head whenever we see what we've witnessed today in the oil markets. In spite of the breaking news the last couple of hours today, speculators still can't grasp the simple facts that lay before them that keeps them hedging their bets into a radically changed market.

It's simply not the same place since OPEC first played their lot in 1997. That was the year they wrenched production downwards in their effort to increase the price on a barrel. Succeed they did, but only to have others to explore with different tools into long-known shale resources that they thought would never be tapped.

How wrong they were when the advent of slickwater did them in starting in 2008! The markets simply haven't been the same since.

But today's market news simply tells the state of the speculator, playing with God only knows who's money, but playing with it nonetheless.

If you're Stateside, you're 401K is taking a beating.

So, here traders were, from last Friday, dealing with "news" that Russia and Saudi Arabia were into some sort of talks on a concerted market action to raise prices, because you know, every time your country goes to war, you have to have a way of paying for it. So, you don't say "no" to the course of action.

Oil rises as a result of said "talks on a production cut". Both countries neither confirm, nor deny...

Iran enters and puts the kibosh on those talks late Friday and the electronic sell-off into Monday and Tuesday squares away the reality again. All is in balance...

Then today...

In spite of the latest US Energy Information Administration's report, and the promise held within of the market reality of declining storage, excess supply and slack demand for refined products and a world awash in crude oil, prices increase markedly...


That "nasty" rumour of OPEC master Saudi Arabia and Russia talking again.

No confirmation.

No denial.

Oil rises...

But it's your investments! You expect a "return" because that's for retirement and returns are supposed to happen, right?...

Deal with reality. EIA results showing 503 million barrels in storage, a record high not seen in eighty years!

Gasoline inventories up another 5.9 million barrels, well ahead of the summer driving season when the speculators start to turn their attention to a peak in gasoline demand, all in spite of refinery capacity down to a low of 86.6 per cent!

Consumers simply aren't burning the stuff, and depending what side of the ecological fence you're on, that's either a good or bad thing. Yes, Mr. Speculator, you're really starting to run out of places to put the oily bits down on. Seems with oil, it's both out of luck and out of time.

Take some worthy advice.

"Put your bucks into alternative energies and let it ride..."


Twitter @GeorgeMurphyOIl

Tuesday, February 02, 2016

Price changes for Thursday, February 4, 2016

Good evening!

Here’s what I have for this week’s price changes. Please keep in mind that the numbers for Heating oil and Diesel fuel are subject to winter blending and may be off somewhat. Use them as a rough indicator of direction!

*Heating oil shows an added 3.6 cents a litre.

*Stove oil shows the same 3.6 cents a litre.

*Diesel shows an added 3.4 cents a litre, and...

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

Market highlights

Canadian dollar steady

*While oil gained some strength over the session, rising to touch close to $36 US for Brent, the Canadian dollar rose right along with it. Averaging close to $145 last week, the dollar gained almost five cents against the US dollar, but did not retreat with the last couple of days trading, staying at a steady $1.40 against the greenback.

US inventories

*While US inventories of crude oil, gasoline both increased last week, prices for distillates like heating, stove oils and Diesel fuel all decreased with colder weather in the US northeast and Mid-west. Inventories were nailed with a loss of 4.1 million barrels, showing good demand for the products, and that’s where speculators poured it on. Crude oil added an additional 8.4 million barrels while gasoline was up another 3.5 million.

            Refiner capacity dropped to 87.4% from the 90.6% recorded the week previously due to unscheduled refinery outages.

Marine Atlantic surcharges

*Any increase to surcharges to Marine Atlantic customers should be totally unacceptable for anyone in this province. While not directly fuel related, any future increases to fuel surcharges are coming, according to the federal corporation. Representation from this province should be made to prevent any increases that supported the former government’s policy of making the crown corporation a “self-sustaining” entity. The policy of any government should be to connect a country, not bar anyone from entry or exiting from that province. “Any increase in rates adds to an artificial inflationary cost that is passed to consumers” and should be absorbed by the federal government.

            Secondly: The boats we have now were first purchased as a replacement to the old “Caribou” and “Joseph and Clara Smallwood” boats, not only because of twenty year replacement, but because of their fuel efficiency. While there hasn’t been any marginal decrease in marine diesel prices, it is wrong to assume that consumers and users of the ferry system will have to pay higher costs due to higher prices for the fuel in the future. Already, there is a glut in shipping worldwide, so much so that fuels, like marine diesel fuels, are expected to retreat in the face of less consumables being transported.

           Lastly: If there’s any improvement in the Canadian dollar, then consumers should be, not only expecting, but demanding a break to fuel surcharges because of the same lower cost of fuel acquisition. The price of fuel, right now, between 2014 and 2016, when we were close to par and today’s dollar, both show that we essentially are paying the same price for fuel.

            Either way, absorb the cost. It’s the price of doing the country’s business!

Watching: US inventories, gasoline inventories, Iran production, Saudi-Russia arrangements, OPEC production figures.

That’s it for this week!


George Murphy

Twitter @GeorgeMurphyOIl

Wednesday, January 27, 2016

Enter the Dragon

           The latest US Energy Information Administration's inventory data is very telling on where the market stands and how traders are having trouble trying to justify any increase in oil prices for the foreseeable future.

            Consider the last three weeks of inventory data released by the EIA. For the past three weeks, data tells us that, in spite of recent drops in refiner capacity and utilization, crude inventories have been showing pretty robust builds in what some even say are in the face of dropping US domestic production.

            Well, the oil is coming from somewhere, isn't it?...

             US domestic production still hasn't shown a solid drop in production and output since the last figures we saw in December. Current production rests somewhere in the 9.2 million barrel per day range. No doubt, some small-time producers are having some troubles, but it's my belief that these same small-time producers have no choice but to pump to pay off their investors. They simply can't shut down...

             It's best for them to risk bankruptcy than to shut down and risk losing any hope of gaining back investors if oil prices rebound. Keep pumping and hoping...

             Elsewhere, Saudi Arabia chatter is that they're in talks with Russia over the possibility of production cuts that may only be a pipe dream. The truth is for the Saudi's is that they simply can't cut back production without losing market-share to neighbouring Iran, who some time ago, promised to get back their market-share lost to the Saudi's when sanctions were first placed on them years ago. Their "re-entry" into the oil markets has the Saudi's on notice that there will be a price war. 

             Secondly, with the prospect of Iran pumping more, why would the Russians risk losing their own market-share to the Iranians?

             Reality bites...

             Three weeks in a row now, the EIA has reported more than 20.8 million extra barrels of crude oil into the US markets. Space to store it is beginning to disappear at a prodigious rate and consumers simply aren't burning gasoline like they used to. With inventory builds ranging 16.5 million barrels ahead of the build-up to the summer driving season, why would I risk putting money into a so-called "bottom" to oil prices?

             Finally, enter the dragon called China. With weakening manufacturing data, low demand growth and an overall faltering economy, where again is the impetus for oil? Prices are low worldwide, but no one is buying.

             God help the markets if China decides to stop their investment and top-up of their strategic reserve! You can look for an immediate availability of 500,000 barrels a day if they stop their program of building it. The ramifications of that could be felt soon enough! But is this the response we're waiting for from China? Are they the factor we're all waiting for to see what a fair world price of oil should be...or could be?

             Is our own economy waiting for China alone?

             So, what do we look for? Any hope of rising oil?

             The market hope rests in one fact, a point that Saudi Arabia may have been forcing on us in the first place: Why pump in the west if you don't have to? Strategic drilling and the forced shut-down of projects and exploration may be the only hope, as fleeting as they may be, that world production itself gets a hit merely on affordability of projects already started but not as yet producing.

              The new dragon in the markets may simply be found in the wheat and corn husk fields ranging between the Dakota's and the Texas Oklahoma panhandles. Simple ability to respond to any crisis, or downfall in world production could be as easy as turning the spigot Stateside.

              Even then, that response can be short-lived!


Twitter: @GeorgeMurphyOil  


Tuesday, January 26, 2016

Price changes for Thursday, January 28, 2016

Hi to all,

First off, thanks for your patience as I have not posted here in some time due to computer issues. I needed a solid upgrade, let's put it at that!
Either way, now that I am free and unencumbered, I intend to post here a little more often than previous as changes to the oil markets occur. You can count on hearing from me a little more as we go through this downturn and changes to the oil markets!

If I bore you, then unsubscribe!

Here’s what I have for this Thursday’s price changes. Keep in mind that due to the winter blend of fuels, heating and Diesel numbers may be off slightly.

*Heating and stove oils show an added 18/100ths of a cent up.

*Diesel fuel shows an added 7/10ths of a cent upwards, and...

*Gasoline shows an increase of 5/10ths upwards.

Market highlights

*The Canadian dollar is starting to gain some ground against its US counterpart, reaching $1.4062 against $1.4589 at the start of this pricing session. In spite of the rise in fuel prices on the New York mercantile exchange this week, those increases have been mitigated by the rise in the Canadian dollar. Heating oil increased a rough nine cents a US gallon this last week on the exchange, while diesel gained a dime a gallon and gasoline increased six cents on average this past week on rising oil.

*All eyes are now on Iran for the first data that may show exactly how much oil the OPEC member will be pumping into the markets now that sanctions have been formally lifted. Iran will immediately respond by adding 500,000 barrels to output, gradually increasing to an added million on top of present output by the end of this year. Look for a “play” as Iran counters lost market share to competitor Saudi Arabia.

That’s it for this week!


George Murphy
Twitter @GeorgeMurphyOil

Wednesday, December 09, 2015

Price changes for Thursday, December 10, 2015

Hi to all,

Here's what I have for price changes for this week, keeping in mind the winter blending formula that may throw off accuracy for heating and Diesel fuel pricing.

*Heating oil shows a drop of 1.8 cents a litre.
*Stove oil shows a drop of 1.8 cents a litre as well.
*Diesel shows a drop of 2.5 cents a litre, and...
*Gasoline shows a drop of 4.8 cents a litre.

Market highlights

*OPEC still won't Institute any kind of a production cut, in spite of the protests of a few members who would like to see. Some support to oil prices. Revenues have certainly taken a beating! But at the latest meeting in Vienna this past Friday, it was decided by members to Sally forth and keep production levels up. With the promise of added production, Oil prices dropped with refined commodity prices following.

*Is OPEC now chasing down the non-OPEC producers? Countries like Russia, Mexico, Norway, and yes, Canada, continue to produce crude oil from fields that have been pumping for years now. None of the companies, or the countries in question, want to lose revenues, nor can they be seen to fall to the whims of OPEC when they want to see other countries reign in production. OPEC would like to see non-OPEC nations join in with production cuts.

Can't happen...

With OPEC getting that "no" answer, first from Russia, OPEC will now start to make the run after these countries. If you can't get them to "participate" in cuts, I believe OPEC is starting to go after their bottom line to force them into an untenable operating position. That being the case, and with Iran about to enter the markets, Oil prices could drop further.  And with new Iranian crude to the markets chiefly for the European markets, Brent prices could be tagged first.

*The Canadian dollar continues to show weakness against the US greenback with the Canuck buck losing another two cents against the neighbouring currency.

I'll leave it at that for now. If you want, drop me a line!


Twitter @GeorgeMurphyOil

Tuesday, November 24, 2015

Price changes for Thursday, November 26, 2015

 Hi to all,

Here's what I have for this week's price changes, keeping in mind winter fuel blending that may affect numbers for heating oil and Diesel fuels.
Heating oil shows a drop of 1.9 cents a litre.
Stove oils also point down 1.9 cents a litre.
Diesel shows a drop of a penny, and...
Gasoline shows an increase of 1.4 cents a litre.
Consumers may get hit next week
"While some prices show upwards movement, it may really be next week that we may see a substantial hit at the pumps because of today's Middle East action, and even then, it's really a test of a different market." That's according to George Murphy, group researcher with the Consumer Group for Fair Gas Prices.
"While distillate fuels are pointing down, all this week showed speculators pouring money into gasoline because that's the only place that is showing any signs of demand placed on it. The actions in Turkey today showed that, while there's plenty of crude oil out there, any Middle East action could be mitigated by other sources that can play into the markets. There's a huge oversupply out there, combined with the ability for the US domestic market to respond to any potential problems. We have a different market reality out there. I expected today's incident to play out in the markets heavier than it did.
"Today showed no 'huge' increase in oil, although it did rise another $1.20 US on the up-tick in the Middle East. It was an up-tick in refined commodities that is rearing its head. Gasoline spots rose another two cents a litre on Turkey speculation, and if it holds for the rest of this business week, we could see consumers get dinged a few more pennies next week as a result. We'll have to let the markets play out to confirm that."
For more information, contact;
George Murphy
Twitter @GeorgeMurphyOil