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Weaker crude cutting canuck pump prices

pine cone
User ID: 144728
08/04/2008 10:21 PM
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Weaker crude cutting canuck pump prices
Weaker crude costs cutting canuck pump prices

Canadian drivers are starting to see pump prices drop in recent weeks because of weakening demand for crude oil, according to figures published by the federal government.

The Department of Natural Resources, which tracks gasoline prices within Canada, said the average price for a litre of gasoline across the country has slid almost 11 cents in the past two weeks.

As of the week of July 29, Canadian drivers are paying $1.29 a litre at the pump, representing an eight per cent drop compared to a year high of $1.40, reached in the middle of July.

The slide in what drivers pay at the pump reflects recent weakness in the global crude oil market.

Since topping out at $147.11 US per barrel on July 11, oil prices have dropped almost $24, dipping to $123.51 Friday morning.

Dropping demand for cars and sputtering economic growth in Canada and the United States have oil watchers believing petroleum demand is set to shrink.

In Canada, pump prices have been moving downwards in lock-step with the world sell-off in crude.

Those savings vary, however, between cities.

For example, Vancouverites pay $1.39 a litre, a savings of nearly seven per cent versus the city's gasoline high of $1.50 reached the week of July 1.

Drivers in Montreal, however, have experienced a drop of more than 20 cents a litre in the past month.

Similar to Vancouver, Montreal reached a high in terms of gasoline price on the first week of July, $1.49 a litre. Currently, however, filling stations in that city are charging drivers on average $1.29, a fall of 15 per cent.
$ per litre Current High (2008) Low (2008)
Calgary 1.26 1.33 1.00
Winnipeg 1.33 1.37 1.07
Halifax 1.33 1.45 1.07
Toronto 1.26 1.36 1.00
Source: Federal Department of Natural Resources

The recent fall in pump prices is a far cry from the low point for gasoline costs reached at the beginning of the year.

At its nadir, the average price for a litre of gas in Canada stood at $1.03, 25 per cent less than the current price across Canada.

Whether gasoline prices will fall any farther in this country is an open-ended question.

On July 10, the Organization of Petroleum Exporting Countries (OPEC) released its latest global oil market outlook covering 2008.

In that document, OPEC said there is more than enough supply either on tap or about to be added to available oil supplies pipeline to ensure crude prices do not rise.

"All of this points away from the direction of higher prices. Clearly, elements other than supply and demand fundamentals are at play," the outlook noted.

OPEC pointed to speculation in the oil futures market as a major factor in keeping crude prices higher than where they might be on the basis of available supplies.

For every real barrel of oil that is traded, there are 18 paper barrels traded on the futures markets, according to OPEC. That represents a three-fold increase compared to the six paper barrels traded for every real barrel trade ration that existed in 2003.

[link to www.cbc.ca]