Another wild week in the crude trade. We started the week with Hurricane Florence coming to the U.S. The potential threat to East Coast pipelines and shipments caused a nice upward bump in the price of WTI. Then on Wednesday the EIA reported a large drop in crude inventories but a massive build in all refined products. Traders digested data and crude prices started to move sideways. The drums have been beating for weeks that the market is tight and that the loss of Iran and Venezuela crude is putting upward pressure on crude prices. But on Thursday, the IEA and the U.S. reported news that in August, the world produced a RECORD amount of crude, even with the losses from Iran and Venezuela! In addition, the U.S. overtook both Saudi Arabia and Russia to become the world’s number one producer of crude oil at over 11 million barrels per day! The news caused crude prices to drop like a rock sending refined product prices back to the level before the hurricane was reported on Monday. Wild ride… So for now, we are holding on Friday waiting to see how Hurricane Florence plays out. I am still a bit bullish on crude going into the end of year, and I’m not convinced that won’t see some refinery maintenance issues in the Midwest causing some local price spikes during the fall harvest. More to come.
In local news, gasoline and diesel prices have been pretty stable around the $2.76/gallon on gasoline and $3.09/gallon on diesel. With the market making big moves both ways, we are still maintaining an average that will probably continue to hold these prices at the pumps.
Propane continues to baffle me. Prices have remained fairly calm. With national inventories below the five year average coupled with mother nature’s history so far this year, I’m worried that any jump in propane demand is going to cause a major price spike. I continue to encourage everyone to lock in their propane prices for this winter and fill their tanks now to ensure being full before the temperature changes.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.