MARKET ANALYSIS
AS PREPARED BY COMMISSION STAFF
October 14, 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.

 
Pump Price Comparison:
As of October 7.
  Gasoline Diesel Furnace Oil
  Pump
Price		 Diff.

Ex. Tax

 Diff. Pump
Price		 Diff.

Ex. Tax

 Diff. Pump
Price		 Diff.

Ex. Tax

 Diff.
Charlottetown 115.5 - 85.3 - 126.0 - 95.8 - 103.1 - 98.2 -
Moncton 118.6 +3.1 84.3 -1.0 132.9 +6.9 96.7 +0.9 119.3 +16.2 105.6 +7.4
Halifax 119.2 +3.7 80.0 -5.3 128.3 +2.3 94.2 -1.6 110.1 +7.0 104.9 +6.7
Fredericton 118.6 +3.1 84.3 -1.0 132.8 +6.8 96.6 -0.8 116.1 +13.0 102.7 +4.5
St. John's 130.2 +14.7 88.7 +3.4 137.3 +11.3 101.0 +5.2 111.0 +7.9 98.3 +0.1

Crude Track (In U.S. $ per Barrel):

Crude Track:

Oct. 1 $98.53 Oct. 2 $93.97 Oct. 3 $93.88
Oct. 6 $87.81 Oct. 7 $90.06 Oct. 8 $88.95
Oct. 9 $86.59 Oct. 10 $77.70 Oct. 13 $81.19
 
  Average Average Average
  2008 2007 2006
January $93.06 $54.43  
February $95.34 $59.42  
March $105.62 $60.86  
April $110.72 $64.08  
May $124.98 $63.54  
June $134.02 $67.46  
July $134.29 $73.80  
August $116.81 $72.17 $73.10
September $104.27 $79.52 $63.89
October $88.74 $85.19 $59.20
November   $94.95 $59.41
December   $91.24 $62.09

Commentary:

A dramatic reduction in crude trading values has been observed as of late with crude now trading at or below year ago levels. The significant deterioration of global financial markets generated by U.S. economic woes has served to weaken economies world wide thereby impacting global demand for energy products. While crude prices have reacted dramatically to this global financial crisis, refined product spot market prices while trending lower have for other reasons not reacted as quickly. Cumulative production interruptions generated by the recent hurricane season, coupled with the increased carrying costs of maintaining large inventory levels, have resulted in below average inventories of both gasoline and distillates. The impact of these low inventory levels has been to create market price volatility for these products and at times significant but temporary price spikes due to product shortages. Notwithstanding, the restoration of Gulf coast productive capacity combined with reduced demand should result in a trending of lower gas and distillates prices in the near future.

 
  US $
Per Barrel		 CDN  Cents
Per Litre		 CDN Cents
Per Litre		 CDN Cents
Per Litre
  CRUDE RUL F/O DIESEL
Oct 13/08       $81.19 115.5 98.3 126.0
 Oct 13/07 $83.69 101.3 77.2 106.6
YOY Diff. $-2.5 +14.2 +21.1 +19.4
% Change -2% +14% +27% +18%

 

1.  DOE Report - October 8, 2008:

 

 

Weekly (bbl)

 Year over Year
Crude +8,100,000

-5.4%
Gasoline -+7,200,000

-3.2%
Distillates -500,000

-9.4%

Refinery Yield: 80.9% vs 72.2% last week
Demand: Gasoline down 5.3%

2. Demand:

U.S. DOE reported on Wednesday that demand for gasoline over the past four weeks ended October 3 was down 5.3% versus the same four week period a year ago.

3. Economic:

The U.S. Labor Department released data this past week indicating that the U.S. economy lost 159,000 jobs in September while the Commerce Department revealed that U.S. factory orders were down 4%.

4.  Weather:

The National Oceanic and Atmospheric Administration (NOAA) forecast for the 2008-2009 winter predicts slightly colder weather than last year for most of the country including the Northeast.

5.  OPEC:

Rapidly falling world oil prices have dramatically affected oil revenues of OPEC member countries, so much so that OPEC officials have scheduled what they have referred to as an “extraordinary” meeting to be held in Vienna on November 18th. It is anticipated that the meeting will result in calls for reduced production quotas. At its September meeting members agreed to abide by pre-established quotas which in effect should have resulted in reduced production of approximately 500,000 bpd as there was much over production. A recent survey has indicated that output has only reduced by 200,000 bpd with the group still producing approximately 300,000 bpd above quota and Saudi Arabia accounting for most of the quota violation.

Note:

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