MARKET ANALYSIS
AS PREPARED BY COMMISSION STAFF
April 29, 2011

 

The following analysis has been used by the Commission as part of its price adjustment methodology and is provided here to assist the public in understanding some of the background factors influencing current market prices.

 
 

Crude Track (In U.S. $ per Barrel):
April 15 $109.66 April 18 $107.12 April 19 $108.15
April 20 $111.45 April 21 $112.29 April 25 $112.28
April 26 $112.21 April 27 $112.76 April 28 $112.86
 
  Average Average Average
  2011 2010 2009
January  $89.44  $78.40 $41.96
February  $88.83  $76.16 $38.58
March  $102.74  $81.12  $47.96
April  $109.67  $84.46  $49.82
May    $74.14  $55.96
June    $75.39  $69.60
July    $73.95  $63.93
August    $77.00  $71.04
September    $75.55  $69.08
October    $81.99  $75.56
November    $84.25  $78.31
December    $89.09  $73.88

Commentary:


A falling U.S. dollar, indication of increased consumption in China and Asia, and continued geopolitical tension in the Middle East and North Africa have all combined to exert an upward pressure on crude trading values in recent weeks.


1. Platts Inventory Update:


Crude prices continue their upward trend this week despite rising inventory levels and higher levels of imports. Analysts attribute the bullish market conditions for crude oil to positive economic signals from the Federal Reserve and economic indicators, such as the rise in orders for U.S. durable goods of 2.5% in March.

Declining U.S. inventory levels for gasoline and distillate product have provided market direction for those products with increasing prices. For the week ending April 22, U.S. crude stockpiles rose 6.156 million barrels which is larger than expected. U.S. gasoline and distillate product inventories trended lower with stocks at levels not seen since October, 2008. Refinery outages such as the recent Texas City refineries of Marathon, Valero and BP and continued strong gasoline demand, are seen as attributing to inventory declines. Recent U.S0 Atlantic Coast product supply tightness should ease with the return to service of Sunoco's Philadelphia refinery. The decline in distillate product inventory levels is of limited concern with the demand for winter fuel dropping as warm weather arrives.
 
  US $
Per Barrel		 CDN  Cents
Per Litre		 CDN Cents
Per Litre		 CDN Cents
Per Litre
  CRUDE RUL F/O DIESEL
April 27/11 $112.76 126.0 103.4 129.5
April 27/10 $82.44 105.0 79.3 102.7
YOY Diff. +30.32 +21.0 +24.1 +26.8
% Change +37% +20% +30 +26%

 

2.  DOE Report:

 

 

 

Weekly (bbl)

Year over Year
 

 Crude

 +6,156,000 +1.48%
 

 Gasoline

 -2,508,000 -8.09%
 

Distillates

 -1,805,000 -3.48%
 
Refinery Utilization: 82.7% vs 89% last year.

3.  U.S. Economic Highlights:
 

• MasterCard reports that U.S. retail gasoline demand fell last week from the previous week. Gasoline demand is up modestly from the same week in 2010. MasterCard states that rising U.S. retail pump prices, up 35 per cent from the same period last year, are having limited impact on the U.S. consumers demand for fuel.

• U.S. Federal Reserve reaffirmed its current interest rate policy of low interest rates for an extended period noting the economic recovery is continuing at moderate pace. The Federal Reserve noted the U.S. housing market continues to show weakness. However, The Federal Reserve notes continued improvements in the job market and encouraging manufacturing sector statistics. The Federal Reserve dismissed concerns over inflation stating the core inflation (excluding energy and food prices) is still within desired levels of 2%. Critics to the Federal Reserve announcement continue to express concern over inflation and the notion that the easy money lending policy is hurting the value of the U.S. currency and causing rising commodity prices, in particular oil.

• U.S. political leaders are expressing concern over rising domestic gasoline prices and the potential impact on the U.S. economy. Many politicians are calling for increased exploration and production as the solution to rising prices.

4. Demand:
 

The DOE reported this week that U.S. gasoline demand was down 1.6% for this past week vs last year representing the fifth straight week of gasoline usage decline.

5. Global Consumption Patterns:
 

The Wall Street Journal is reporting that significant changes in global consumption are being observed. U.S. consumption is falling as the use of more efficient vehicles and reduced driving impact domestic consumption. China's consumption, on the other hand, was up 874,000 barrels in March of this year vs last year representing a year over year increase of 10.6%. Since 2000, U.S. consumption has dropped 4%. Over this same period, combined demand from Brazil, India, China and Saudi Arabia has risen 76%. By itself, China has more than doubled its annual consumption of petroleum products.

Note:

Legend:
DOE Department of Energy
RUL Regular Unleaded Gasoline
F/O Furnace Oil