The word nebulous comes in handy when someone has no answer to a question, or needs to defend their answer with the most mysterious answer of all, “Well that’s a pretty nebulous question!” To which the asker, doe-eyed in self-doubt responds equally nebulously, “Yeah, I guess so.”

In my world, nebulous refers to a cloudy subject that would best be left up where it belongs – in the air. This subjective adjective (how’s that for a Grade 7 sentence construction Mrs. MacDonald?), is accurate when it comes to the season we are entering, that being budget time. This is, at the best of times, a coin toss, which should be a best of 11, not a one-off.

In the past, a simple one toss heads or tails would suffice if one were asked where their fuel prices are going over the next three, six, or nine months. Everyone just wants a number.

But this year is different because the driving factors have changed the balance of the pricing equation.

How are inventories you ask? That’s a very good question.

·        Crude oil is the highest on record,

·        Gasoline levels are well above the five-year average, and;

·        The driving season has now become a, “See ya in April” question,

·        Distillates are near the high point over the last five years also, so going into the shoulder period, it’s a good time for a demand and price nap.

As for the refiners’ ability to supply the above refined products, they are still running well over 90% capacity and will stay that way until gasoline demand drops, which judging by the sales figures for SUVs doesn’t look like anytime soon. So far it looks like refined product pricing should stay stable (if not go a little lower) for the next six months.

Another equation in the mix to consider is the fact that there are currently no problems with pipelines. In Canada, this is a remote problem as any new pipelines are a political pipedream.

And what about the OPECIANS and their nebulous question, “Hmmm, maybe we should, maybe we shouldn’t, sort of threat to freeze production?” This is another good question. As I have opined in previous reports, this is another bluff that the team as a whole are not in agreement with because they can’t afford the market share loss or loss of revenue.

So, if we throw in the full speed run up to the November U.S. presidential election circus, and the subsequent lame duck period when the new president’s January inauguration happens, then this tells me that what you see today for crude and refined product prices is what you will see from now until the beginning of Q2 2017.

After this, look for crude prices to edge up and stay over $50/bbl to a ceiling of $53/bbl for Q3, which translates to an 11% increase in distillate and gasoline prices.

It’s a wait and see, Heads, who wins? Tails, who knows?