MARKET ANALYSIS
AS PREPARED BY COMMISSION STAFF
September 12, 2014

 

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 Crude (US$/bbl)
    WTI Brent
 

Aug 29

 $ 95.96

$103.19
 

Sep 2

 $ 92.88

$100.34
 

Sep 3

 $ 95.54

$102.77
 

Sep 4

 $ 94.45

$101.83
 

Sep 5

 $ 93.29

$100.82
 

Sep 8

 $ 92.66

$100.20
 

Sep 9

 $ 92.75

$ 99.16
 

Sep 10

 $ 91.67

$ 98.04
  Sep 11 $ 92.83 $ 98.08
 Average Brent Crude for September: $100.16.
 
West Texas Intermediate
  Average Average Average
  2014 2013 2012
January  $ 94.73  $ 94.70  $100.51
February  $100.57  $ 95.50  $102.26
March  $100.46  $ 92.73  $106.36
April  $102.15  $ 89.59  $103.18
May  $101.79  $ 94.93  $ 95.47
June  $105.14  $ 95.76  $ 82.28
July $102.39  $104.68  $ 87.93
August $ 96.08  $106.49  $ 94.05
September $ 93.26  $106.24  $ 94.74
October    $100.74  $ 89.72
November    $ 94.00  $ 85.87
December    $ 97.87  $ 88.06
         
  US $
Per Barrel		 CDN  Cents
Per Litre		 CDN Cents
Per Litre		 CDN Cents
Per Litre
  CRUDE RUL F/O DIESEL
Sep 10/14 $ 91.67 132.9 103.3 139.3
Sep 10/13 $107.39 140.3 106.0 144.3
YOY Diff. -15.72 -7.4 -2.7 -5.0
% Change -14.6% -5.3% -2.5% -3.5%

Commentary:


Crude oil pricing continues to fall as both Brent and WTI are currently trading approximately 5% below levels observed on September 1 and 15% below mid-June trading values.  A rejuvenated U.S. dollar, increased supply and reduced global demand all have contributed to the current market dynamic.

The U.S. dollar has gained strength due to sustained evidence of an improving economy.  The U.S. dollar and crude commodities trade inversely to each other with a stronger dollar making crude commodities more expensive to purchase.

Recent concern over the relative health of the Chinese and European economies has raised concern over weakening global demand.  Both the U.S. Energy Administration and the Organization of Petroleum Exporting Countries have lowered their expectations for 2015 global demand in forecasts released just this past week.

Against the backdrop of a weakened global demand, the global oil market appears to be well-supplied, with U.S. production hitting a 28 year high and Libyan output now up to 800,000 barrels per day from 200,000 only months ago.

Going forward, geopolitical tensions in the Ukraine and the Middle East may once again exert an upward pressure on the market but at this point, barring an unexpected weather related supply interruption, depressed crude pricing appears to be the market characteristic for the near future.

Economic Data:

Platts Inventory Update:

The US Energy Department ("DOE") weekly petroleum inventory assessment, issued September 10, 2014, reported a decrease in US crude stocks of 972,000 barrels.

US gasoline inventories increased by 2,380,000 barrels over the previous reporting period. Implied gasoline demand decreased in this reporting period by 607,000 b/d.

US distillate inventories increased by 4,090,000 barrels. 

US refinery utilization increased by 0.6% to 93.9% of capacity.
  
DOE Report:

 

 

 

Weekly
(bbl)

Year over Year
% Change
 

Crude

 -972,000 -0.4%
 

Gasoline

 +2,380,000 -2.4%
 

Distillates

 +4,090,000 -3.5%
Source: DOE September 10,, 2014

 

Note:

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