Gasoline prices fell about 12 cents a liter overnight in Ontario and are down across much of Canada after a big drop in the price of crude oil this week that analysts say could be related to fears of a recession.
GasBuddy reports prices dipped to around $1.79 in major Ontario cities on Thursday from $1.91 the day before, while cities like Vancouver and Montreal saw prices drop around six cents overnight. .
Prices in other parts of Canada should soon catch up to those in Ontario, said En-Pro International chief oil analyst Roger McKnight, who expects prices to continue to fall in coming days.
“The (decrease) of 12 cents was basically due to market forces. Go down another three tomorrow, and believe it or not, I’m expecting another seven on Saturday.”
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He said the drop came despite gasoline inventories remaining low, suggesting the move is largely due to a change in investor sentiment.
“Someone on Wall Street said hit futures lower, the futures market in New York Harbor, because they think we’re headed for a recession here and that’s only going to severely erode demand. People won’t need a lot of gas because they won’t go anywhere, that’s why they lowered prices. If you ask me, it’s a complete turn of the tables.”
Rory Johnston, founder of Commodity Context, says the lower prices at the pump come after crude fell around $10 to drop below $100 a barrel on Tuesday.
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“The biggest thing we’ve seen over the last month, over this week, is a very steep drop in both the value of crude oil globally and the relative value type of gasoline.”
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Gasoline value is another way of referring to refinery margin, or the difference in price between crude and refined gasoline.
Prices at the pump have been soared by both higher crude prices and high refinery margins due to limited capacity in processors. Johnston said that while the price of crude has risen to $120 a barrel, consumers have been paying the equivalent of $180 a barrel because of refinery markups.
However, those margins fell about 25 percent between Tuesday and Wednesday, and while it’s unclear what exactly caused the reversal, Johnston said concerns about future demand are linked to recession fears, speculators cancel bets on future prices or the coming on stream of more refinery capacity. after the maintenance season.
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“Right now, unfortunately, it’s a billion dollar question. And I think the challenge is that we don’t know exactly what is causing it.”
He said prices are likely to remain volatile, noting that the price of crude oil was trending up five percent on Thursday.
“What we’re probably going to see is some kind of persistent high price volatility, but I don’t think we’re in a stage yet or we’re going to be expecting some kind of real relief.” at the consumer level for the rest of the summer.”
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