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George Murphy looks into his crystal barrel and sees a drop in fuel prices

Looks like the retreat in prices I predicted a couple of weeks back is starting to kick in. Here's what I have for this week's price changes:

Joe Gibbons/The Telegram
George Murphy poses on a very windy day last week in St. John's.

• Heating and stove oil shows a drop of 3.2 cents a litre

• Diesel fuel shows a drop of 3.5 cents a litre

*Gasoline shows a drop of 4.1 cents a litre. MARKET HIGHLIGHTS


•Saudi Arabia, OPEC's largest producer of oil, met in a separate meeting this week with non-OPEC producer, Russia on the prospects of instituting any freeze in oil production. While the markets are spotty on any support of a freeze, it seems that any freeze in production will end up on the floor as the sceptics don't see either country, or OPEC, to stick with self-imposed limits. Oil prices struggled to gain any ground this week on the news. RELATED: Russia, Saudi Arabia pledge to stabilize oil output



• Last week's inventory data out of the US Energy Information Administration has some things of note this week.

First off, but not too unexpected, was the fact that oil showed a gain in inventories that helped start a drop in prices. Inventories of oil were up 2.3 million barrels. Part of that build may very well have been helped by additional supplies from Alberta and Nigeria, most recently back in the markets from their supply disruptions.Secondly, distillate inventories were up again well ahead of the fall and winter season. All good to see ahead of consumption time.

While refinery capacity was also down, reflective of the changing demand season for gasoline and distillates, I have seen a retreat in gasoline simply as the result of a drop in gasoline demand at the end of the summer driving season.

Look for the focus of the markets to switch to attention towards the distillate markets from now until spring 2017. George Murphy is a former MHA who has turned predicting the price of gas into a hobby. On Twitter, he's @GeorgeMurphyOil

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