MARKET ANALYSIS
AS PREPARED BY COMMISSION STAFF
December 31, 2010

 

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):
Dec 17 $88.02 Dec 20 $88.81 Dec 21 $89.82
Dec 22 $90.48 Dec 23 $91.51 Dec 27 $91.00
Dec 28 $91.49 Dec 29 $91.12 Dec 30 $89.94
 
  Average Average Average
  2010 2009 2008
January  $78.40 $41.96 $93.06
February  $76.16 $38.58 $95.34
March  $81.12  $47.96 $105.62
April  $84.46  $49.82 $110.72
May  $74.14  $55.96 $124.98
June  $75.39  $69.60 $134.02
July  $73.95  $63.93 $134.29
August  $77.00  $71.04 $116.81
September  $75.55  $69.08 $104.27
October  $81.99  $75.56 $76.72
November  $84.25  $78.31 $57.44
December  $89.09  $73.88 $42.17

Commentary:


Crude prices continued on a steady ascent over the past two weeks driven primarily by reduced inventories, cold weather in Europe and North America and positive news relative to the U.S. and Chinese economies. OPEC's reluctance to increase established production quotas and year end tax planned reduced inventory holdings on the part of U.S. refineries also factored into what has been referred to by some industry watchers as the “March to $100”.  A less than anticipated draw in DOE reported crude inventory and data released on Thursday indicating that manufacturing growth in China had slowed to a 3 month low resulted in a drop in crude prices at month end. Refined distillate product prices meanwhile were impacted by the onset of winter weather while gasoline prices rose in reaction to the temporary unexpected St. Croix refinery closure coupled with an increase in product demand.
 
  US $
Per Barrel		 CDN  Cents
Per Litre		 CDN Cents
Per Litre		 CDN Cents
Per Litre
  CRUDE RUL F/O DIESEL
Dec 29/10       $91.12 109.6 86.3 112.7
Dec 29/09 $78.87 96.1 76.5 100.2
YOY Diff. +12.25 +13.5 +9.8 +12.5
% Change +15.5% +14.1% +12.8% +12.5%

 

1.  DOE Report:

 

 

Weekly (bbl)

Year over Year

Crude

 -1,300,0000 +4.1%

Gasoline

 -2,300,000 0.5%

Distillates

 +200,000 1.06%
Refinery Yield

87.7%

  
Demand

See Below

  

2. Demand:
 

• MasterCard advised this week that for the week ended December 24th, retail gasoline sales were up 3.9% over the same period last year representing a reversal of the previous week's 4% year on year drop. MasterCard officials attributed the switch to the timing of the Christmas holiday this year. The rolling four week average actually declined 0.4% from the same year ago period.
• According to moneycontrol.com cold weather has driven up heating fuel demand in both Europe and the United States. U.S. heating oil demand is expected to average 4.6% above normal. Harsh winter weather in China has also led to increased demand.


3. Economic:
 

• MasterCard reported that holiday sales rose 5.5% from November 5th through December 24th.
• China raised its benchmark lending rate for the second time in two months in a bid to ease growing inflation concerns.
• The Conference Board's confidence index unexpectedly decreased in December to 52.5 less than the lowest forecast in a Bloomberg News survey of economists according to a report on December 28th.
• The S&P Case-Schiller index of property values fell 0.8% from October 2009, the biggest year-over-year decline since December 2009.

4. Other:
 

The U.S. Northeast, the world's top heating oil market, was expected to be colder than usual from December 24 to December 28 according to weather data released last week from the National Weather Service. U.S. heating oil demand was forecast to be 4.6% above normal for the week ending December 25th. It was 19.6% above normal the week previous.

Note:

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