Inventories Fall, But the FED Pushes Dollar to the Positive

Good morning,

The crude oil picture continues to be interesting. OPEC has continued to push exporting of refined products with little drawdown in inventory, showing that the glut of crude is not curtailing as quickly as planned. However, the U.S. production is starting to peak and inventories of crude fell for the second straight week causing a knee-jerk rally earlier today after the sell-off Friday on the news of more rigs added into production. But then the dollar, which has been pounded recently, started to rally hard on news from Janet Yellen that rate hikes are going to continue to come. In other words; volatility, volatility, volatility. I still believe that we are going to see crude trade in the $42-48 range for the remainder of the year.

The weekly EIA Inventory report showed a 7.6MM barrel draw in crude inventories, a surprise build of 3.1MM barrels of distillates, a small draw of 1.6MM barrels of gasoline, and a less than stellar build of 1.7MM barrels of propane. As I stated earlier, and bullish reaction to this report has been capped by the FED reporting. The important number is the propane build. The build is still very weak in terms of the past week and holiday. Unless a surprise large build comes next week, I am holding firm on a future price spike in propane and supply tightness.

In local retail news, gasoline prices averaged around $2.15/gallon and diesel prices around $2.39/gal. Our summer-fill program has started for propane and we are currently at the lowest prices of the year! Please call now to have your tank filled and sign up for one of our contract options. I highly recommend everyone contracting this year due to limited supplies and the potential for large price spike.

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

Propane Heating Contracts Released, Petroleum Prices Steady

Good afternoon,

I hope everyone enjoyed their 4th of July celebration and was safe. With a short week in trading and many traders on vacation, the markets were very out of balance the past seven days due to light volumes. However, news hit the airwaves that many OPEC countries, including Saudi Arabia increased exports in June. There is a delicate balance between the continued increase in exports and the production cuts. In addition, the U.S. seems to be hitting a peak in production and I think will be taking a breather for a bit. I don’t think we will see much change in the oil rig counts until we get through summer. The EIA released it’s weekly inventory report today, and although the results look bullish on the surface, crude oil gave back all the initial gains by the day’s end. The national crude oil inventories decreased 6.3MM barrels, gasoline decreased by 3.7MM barrels, distillates decreased by 1.9MM barrels, and propane inventories increased by 2.1MM barrels. The only disappointment in my opinion was the propane build. I was hoping with the holiday week, we might have seen that number closer to 2.5MM barrels. As propane inventories continue to lag, the crop drying situation continues to point more towards higher demand this fall. With inventories at historical lows based on demand, I am still calling for a price spike in propane this year regardless of price in crude.

In local news, gasoline prices have averaged out to about $2.15/gallon and diesel prices around $2.39/gallon. Propane summer fill is in full swing. I am highly recommending that everyone fill their tanks this summer. The current price is very attractive compared to future contract pricing. We also have released our contracts for next year. Please call the office now for current prices on summer fill and heating contracts.

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