Good morning!
Happy Friday! Colder weather is starting to set in and there was even some snow/mix this morning. Hard to believe that winter is almost here! Anyways, crude prices took a wild bumpy ride again this week. The COP26 concluded this week with not much changed except a wanting to get off of fossil fuels. However, the conference sparked backlash from Saudi Arabia and others. The US and other nations have called for the ending of fossil fuel production, yet demanded Saudi Arabia and others in OPEC to pump more oil to bring prices down. Saudi Arabia responded by saying that since the world wants less fossil fuels, they might pump less fuel and allow the world to experience the pain of high prices. Saudi Arabia believes the world is not ready for a full transition to alternative energy and they are not going to be bossed around, especially from the US, as we continue to withhold our own oil production from the market. In addition, Saudi Arabia raised their prices for December and January shipments just to prove a point. Then, inflationary data for the US came out at the highest in 30 years and the API reported draws in national crude oil inventory. By Wednesday, crude oil prices were touching on the highest prices for the year. On Wednesday, the EIA instead showed a build in crude oil inventory and the Biden administration, along with the FED, decided that maybe it’s time to do something about inflation. The coupled news sent the Dollar much higher and crude prices tanking. In addition to the bearish sentiments, COVID seems to be coming back for one last major stand in the US and Europe, and China started cutting crude imports due to higher prices. At one point, WTI dipped below $80/barrel again after being at $85/barrel earlier in the week! As I’ve been writing, the crude trade is going to be wild going into the end of the year and whether or not traders are going to ring the register on a 70% gain for the year.
In local news, gasoline and diesel prices have remained fairly steady as the market continues to go back and forth every day. There is not really a directional movement carved out. I’m expected to see prices remain around the same for the coming week.
Propane prices have continued to stay in check. As winter approaches and winter price indexes hit the market, I don’t expect too much movement on price for the time being. We have not moved price at retail for almost a month and I welcome the news considering prices went up over 50 cents/gal since July! So now we just need to wait and see how hard mother nature hits us this winter. I am cautiously optimistic going into the winter. If the FED raises rates sooner and we get a leg-down movement in crude prices, propane prices could stay in check.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford