Good morning,
Crude oil prices continue to inch back into bear market territory. At the current rate, WTI crude is poised to fall through $50/barrel. This is only three weeks after an attack on the world’s largest oil refinery! Saudi Arabia claims to be back in full production and the rest of OPEC and Russia are concerned about the possibility of surplus crude entering the market in 2020. In addition, the issues with the US/China trade war are feeding into concerns on world oil demand. The rest of the world is taking pause and watching. Overall, crude demand in the US is very strong, so it’s a bit of a market play than fact. But time will tell. If a trade deal is completed, hold on to your seats because crude prices will bounce higher! For now, crude prices are in check as many money managers have exited long positions on crude going into Q4.
In local retail news, gasoline retail prices continue to remain under $2.49/gallon and diesel prices remain under $2.89/gallon. I believe gasoline prices will continue to hold, but diesel supply in Central Wisconsin is very tight and I expect to see diesel prices go higher in October. Once harvest kicks in, we could see a spike on diesel prices at the pump.
Propane prices are holding pattern with crude. Until propane experiences a demand event, there is just not a lot of movement. I know some people are concerned that their contract price is higher than the board price today. Remember that a contract provides you with upside price protection. We are very early in the season and have a long way to go before a heating cost average will carve out.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford