MARKET ANALYSIS
AS PREPARED BY COMMISSION STAFF
May 31, 2012

 

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:
  Recent WTI Crude (US$/bbl)
 

May 17

$92.56
 

May 18

$91.48
 

May 21

$92.57
 

May 22

$91.66
 

May 23

$89.90
 

May 24

$90.66
 

May 25

$90.86
 

May 29

$90.76
 

May 30

$87.82
 Average Brent Crude for May $111.21. 
 
  Average Average Average
  2012 2011 2010
January  $100.51  $89.44  $78.40
February  $102.26  $88.83  $76.16
March  $106.36  $102.74  $81.12
April  $103.18  $109.67  $84.46
May  $ 95.47  $101.29  $74.14
June    $96.40  $75.39
July    $97.43  $73.95
August    $86.23  $77.00
September    $86.13  $75.55
October   $86.10  $81.99
November   $96.86  $84.25
December   $98.51  $89.09
         
  US $
Per Barrel		 CDN  Cents
Per Litre		 CDN Cents
Per Litre		 CDN Cents
Per Litre
  CRUDE RUL F/O DIESEL
May 25/12 $ 90.86 124.6 100.8 124.8
May 25/11 $101.32 122.9 95.9 119.9
YOY Diff. -10.46 +1.7 +4.9 +4.9
% Change -10% +1% +5% +4%

Commentary:

1. Platts Inventory Update:


The next U.S. Energy Department (DOE) inventory report is due May 31, 2012 and petroleum analysts are anticipating that crude inventory supplies will reach levels not seen since 1990. Analysts anticipate that gasoline inventories will fall due to reduced refining and distillate product inventory will remain at previous levels. With the significant supply of crude inventories, weak demand, and weak economic signals coming from both the U.S. and Europe, continued downward pressure on crude oil prices is expected.


DOE Report:

 

 

 

Weekly (bbl)

Year over Year
 

 Crude

 +883,000 +3.1%
 

 Gasoline

 -3,299,000 -4.2%
 

Distillates

 -309,000 -15.3%

MasterCard, in its weekly SpendingPulse report stated that gasoline demand rose by 3.0 percent last week over the previous week. Gasoline consumption was 1.1 percent below year earlier levels. The increase in gasoline demand coincided with the U.S. Memorial Day holiday, a traditional kick start to U.S. summer driving season.

2.  U.S Economic Highlights:
 

 Some economic signals on the U.S. economy:

  • Contracts to purchase previously owned U.S. homes fell in April to a four month low. Application for mortgages fell last week despite record low mortgage interest rates. The U.S. housing market has been one of the U.S. economy's weakest areas coming out of the recession.

  • The proportion of Americans in their prime working years that presently has jobs is smaller than it has been at any time in the 23 years before the recession.

  • U.S. regular retail gasoline price declined 4 cents to an average price of $3.669/gal over the past week. This price was 12.5 cents below year ago levels.

  • There continues to be a decline in U.S. distillate product inventories attributed mainly to changing sulphur regulations. Atlantic and Gulf Coast refineries are opting to export distillate to Europe due to better prices and environmental regulations.


3.  Other:
 

  • Brent crude prices continue to decline due to the increasing concerns about the euro zone. Although Brent crude trades at a premium to West Texas Intermediate (WTI), its pricing is relevant to east coast North American refineries. There still exists a significant premium in pricing for Brent over WTI crude.

  • Economic conditions in both Spain and Greece continue to provide international economic concern over a possible further recession in Europe. The Euro currency continues to decline as investors pull back from Europe. In addition, market analysts noted continued concern about the scaled back projections for the 2012 Chinese economy.

  • Next scheduled meeting of OPEC is June 14, 2012.

Note:

Legend:
DOE Department of Energy
RUL Regular Unleaded Gasoline
F/O Furnace Oil
WTI West Texas Intermediate