Well, higher prices at the pump have arrived. With the Middle East heating up tensions in Syria and Iran, as well as Nigeria having issues with their supply, a very high “risk-premium” is built into the price of crude at this time. I should be clear, that in my opinion, there are NO supply problems across the world right now. Our market, including the world market, have easy and plenty of access to product. Eyes are also still watching Europe, which is continually a hair-trigger away from announcing something awful.
That all being said, we are from the school-of-thought we cannot sustain these high prices for very long. Therefore, covering a short term usage would be ok, but long term coverage into the fall just seems too high of a risk premium at this time taking all issues into account. If there is any slowing down in the world economy, the crude oil market will tumble. If these prices continue to climb, a slowing down, in my opionion would be inevitable.
Propane has picked up some momentum over the month of February. Due to a warm winter, I believe we will see attractive summer fill prices. Right now the spread between rack and futures contracts is steep, butsummer months are looking very nice. This is because we need to get rid of current inventories to store for
winter months next year.
If you have any questions on the current market conditions please feel free to give me a call. Once again, these are only my opinions based on obtainable information.
Best regards,
Jon Crawford – Vice President