*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.
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.
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.
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.
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.
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.
*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.
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.
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.
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.
*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.
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.
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.
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 1/10th of a cent.
*Diesel shows an increase of 4/10ths of a cent, and...
*Gasoline shows an increase of 2.8 cents a litre.
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.
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 14th 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 1st, 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 1st 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”.
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.
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.
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.