Post Harvey and Pre Irma

Good morning,

Our thoughts and prayers are with everyone affected by Harvey and the upcoming Irma. The hurricanes have caused massive outages and production delays. Prices spikes over 30 cents on gas and diesel. Prices are starting to calm down and hopefully we have peaked at retail. The North Korea and other geo-political events seem to be not affecting the oil markets at this time. The national inventory reports are mostly skewed due to the hurricanes and post holiday weekend. I expect the inventories and markets to be back to normal operations by the end of September. I will give more detailed analysis of the refined markets once these hurricanes have past.

In the meantime, if you have not contracted propane, I would highly recommend doing so. Please call the office for current prices.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Best regards,

Jon Crawford – Pres.
Crawford Oil and Propane

Hurricane Causes Price Spike… But Be Patient…

Good morning,

First of all, our thoughts and prayers are with everyone in the Houston area affected by hurricane Harvey. The damages are severe and all petroleum production and exporting has ceased. The hurricane has caused a massive spike in the cost of gasoline and diesel fuel. We are expecting to see prices rise about 30+ cents on each product. But be patient. Although some geopolitical issues are at play with North Korea and Venezuela, crude prices have dropped because crude inventories should start to build in the U.S. and OPEC is cheating. In addition, at the end of September, we go into historical low crude consumption. And, the future hedge positions jumped to over 500k contracts last month, the highest in years. Basically, the traders are betting on higher crude that I don’t think is going to happen. Therefore, I think that once Houston refineries come back online at the end of September, we are going to see a massive drop in gas and diesel by early to mid-October. And, I also think that some traders will exit their positions at the end of September knowing the changes of not making out in positive territory going through Q4. I wouldn’t be surprised to see crude fall to the low $40’s by Thanksgiving. The EIA Inventory report showed a surprise drop in crude of 5.4MM barrels (I think this will adjust next week), no change in gasoline inventories, a 700k barrel build in distillates, and a 1.7MM barrel build in propane. Since the hurricane has stopped propane exports, propane inventories are starting to build. With a high corn drying demand being predicted, these builds are taking some pressure off of massive propane spikes this year. I am still calling for propane prices to climb, but hopefully not as high due to the unforeseen shutdown of exports from the hurricane.

Local retail prices on gas and diesel will continue to rise. Gas costs are increasing by almost 5 cents/day, so you will see street prices all over the place. I expect gasoline retail prices to hit almost $2.49/gallon by Labor Day and diesel retail prices will climb to $2.59/gallon. Propane prices climbed nearly 15 cents/gallon in August just as I predicted. I hope to see propane hold around these current prices going into September. If you have not contracted your propane for the heating season, please do so. After September 1st, propane contracts have the option of increasing in price.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Best regards,

Jon Crawford – Pres.
Crawford Oil and Propane