After retail prices touched the highest level since 2014, the crude oil rally has decided to take a breather. Saudi Arabia, Russia, and Iraq have all pledged to maybe relax production cuts because of sanctions on Iran and Venezuela. In addition, Iran is trying to work a deal the EU and China to keep the nuclear agreement in place without the U.S. Higher prices are starting to put a little dent on demand and crude inventory levels rose sharply in the U.S. last week. The U.S. also added another rig to the overall count and increased daily crude production to over 10.7MM barrels/day. And Trump’s talk of continued trade war with China is spooking the hot markets right now. On the bullish side, we are entering high volume driving season and geopolitical tensions with N. Korea and Iran are a bit unsettling. But from true supply and demand fundamentals, a surplus in crude production could be on the way which could wipe out $5-7/barrel on WTI.
Local retail gasoline prices have climbed over 2.84/gallon and diesel prices are approaching $3.19/gallon. These prices are getting people talking and we could not be more disappointed at the timing of these increases. Although based on the previous paragraph, hopefully these are the highest prices for summer and we go down from here.
Propane prices are very steady and we are recommending that everyone fill their propane tanks when they can. Based on inventory levels in the country, we don’t expect to see much of a price drop in propane prices this summer. Next season heating contracts will be out closer to the end of June. Please stay tuned for more info.
Have a safe and happy Memorial Day weekend!
Jon Crawford – Pres.