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MARKET
ANALYSIS
AS PREPARED BY COMMISSION STAFF
September 12, 2008
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.
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Pump
Price Comparison:
As of September 8th. |
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Gasoline |
Diesel |
Furnace Oil |
| |
Pump
Price |
Diff. |
Ex. Tax |
Diff. |
Pump
Price |
Diff. |
Ex. Tax |
Diff. |
Pump
Price |
Diff. |
Ex. Tax. |
Diff. |
|
Charlottetown |
128.6 |
- |
96.7 |
- |
138.1 |
- |
107.3 |
- |
114.1 |
- |
108.7 |
- |
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Moncton |
130.0 |
+1.4 |
94.3 |
-2.4 |
140.3 |
+2.2 |
103.3 |
-4.0 |
125.6 |
+11.5 |
111.2 |
+2.5 |
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Halifax |
132.3 |
+3.7 |
91.6 |
-5.1 |
133.9 |
-4.2 |
99.1 |
-8.0 |
117.5 |
+3.4 |
111.9 |
+3.2 |
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Fredericton |
129.7 |
+1.1 |
94.1 |
-2.6 |
139.6 |
+1.5 |
102.7 |
-4.6 |
123.3 |
+9.2 |
109.1 |
+0.4 |
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St. John's |
137.3 |
+8.7 |
95.0 |
-1.7 |
144.3 |
+9.2 |
107.2 |
-0.1 |
118.9 |
+4.8 |
105.2 |
-3.5 |
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Crude Track (In U.S. $ per Barrel): |
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Aug 28 |
$115.59 |
Aug 29 |
$115.46 |
Sep 2 |
$109.71 |
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Sep 3 |
$109.35 |
Sep 4 |
$107.89 |
Sep 5 |
$106.23 |
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Sep 8 |
$106.34 |
Sep 9 |
$103.26 |
Sep 10 |
$102.58 |
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Average |
Average |
Average |
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2008 |
2007 |
2006 |
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January |
$93.06 |
$54.43 |
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February |
$95.34 |
$59.42 |
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March |
$105.62 |
$60.86 |
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April |
$110.72 |
$64.08 |
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May |
$124.98 |
$63.54 |
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June |
$134.02 |
$67.46 |
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July |
$134.29 |
$73.80 |
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August |
$116.81 |
$72.17 |
$73.10 |
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September |
$107.13 |
$79.52 |
$63.89 |
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October |
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$85.19 |
$59.20 |
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November |
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$94.95 |
$59.41 |
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December |
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$91.24 |
$62.09 |
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Commentary: |
The seemingly contradictory scenario of
fluctuating gasoline market prices in light the existence of
steadily declining crude prices has continued this past two
weeks. Crude prices continue to fall aided by a rising U.S.
dollar and global demand destruction. Notwithstanding, nagging
production interruptions and persistent storm activity in the
Gulf of Mexico continue to prop up gasoline product prices.
Given the fundamentals, however, including dramatically reduced
input costs, continued reduced market demand and the proximity
of the industry switchover to more cheaply produced winter gas
blends, all things being equal, gasoline prices should fall off
in the near future.
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US $
Per Barrel |
CDN
Cents
Per Litre |
CDN Cents
Per Litre |
CDN Cents
Per Litre |
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CRUDE |
RUL |
F/O |
DIESEL |
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Sep 9/08 |
$103.26 |
128.6 |
108.8 |
138.1 |
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Sep 9/07 |
$77.49 |
102.4 |
72.3 |
102.4 |
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YOY Diff. |
$22.74 |
26.2 |
36.5 |
35.7 |
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% Change |
+33% |
+26 |
+50% |
+35% |
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1. DOE Report - July 30, 2008: |
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Weekly (bbl) |
Year over
Year |
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Crude |
-5,900,000 |
-7.6% |
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Gasoline |
-6,500,000 |
-1.3% |
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Distillates |
-1,200,000 |
-2.6% |
Refinery Yield: 78.3% |
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Gasoline Demand:
down 2.1% versus the same four weeks last year. |
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The DOE reported this week that
"U.S. gasoline demand declined by 2.3% in May and 4.4% in June
compared with the same time periods a year ago. This reflected the
largest decline in year-ago gasoline demand in May since 1980 and
the fifth largest year-ago decline in any May since at least 1945.
For June the comparisons are even more dramatic with the year-ago
decline this June the largest since 1980 and the third largest since
1945."
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In yet another
indication of slumping global demand for oil, the International
Energy Agency this week lowered its global demand forecast for both
2008 and 2009. World demand will average 86.8 million barrels per
day in 2008, 100,000 barrels per day less than its last estimate. In
2009, the IEA estimates global demand at 87.6 million bpd, 140,000
bpd less than its previous estimate.
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OPEC announced on Tuesday night
in Vienna that it would not officially reduce existing quotas
but did state that it would insist member nations abide to their
previously agreed to quotas. The announcement was intended to
minimize any emotional or speculative market reaction.
Notwithstanding, the implication will be a net reduction of
approximately 500,000 bpd of production the extent to which
member nations exceed currently stated production quotas.
At this
point Hurricane Ike's impact on Gulf of Mexico oil production
facilities appears to be diminishing as the storm is tracking in
a more Westerly direction. Notwithstanding, potential for both
physical damage and related market impact continues to exist.
Indeed, due to interrupted production and supply in this region
cargoes of refined product and in particular gasoline continue
to be diverted from East Coast ( NYMEX) markets to Gulf Coast
markets thus underpinning refined product prices there.
As of Thursday
night, however, reports of the storm's potential damage have intensified
with the storm now tracking toward Houston. A possible storm surge
of 10 - 15 feet now threatens numerous refinery operations located in
the Galveston Bay and Texas City area. At least 11 refineries are
in shutdown mode at this point. The Gulf Coast produces more than
7 million barrels of refined products per day, representing 42% of total
US refining capacity.
Platts reports that
in reaction to the storm and its potential damage, trading on Nymex has
intensified as product originally bound for New York Harbour is now
being bought up a premium for diversion to Gulf Coast markets. The
supply tightness on the East Coast has been magnified by the change to
winter specification gasoline as many traders were allowing their
inventories of summer gas to run down hoping to replace it with cheaper
winter grade gasoline. The situation is compounded by the
lingering effects of Hurricane Gustav with approximately 1.5 million
barrels per day of oil production remains offline due to that storm's
damage.
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Legend: |
| DOE |
Department of Energy |
| RUL |
Regular Unleaded Gasoline |
| F/O |
Furnace Oil |
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