Good morning!

Happy Friday! The data released this week is causing much confusion and forcing traders to take pause. For months now, the fear of recession has loomed over the markets.  Analysists have been waiting patiently for earnings and Q2 GDP data to be released that would either confirm their fears or maybe kick the can down the road.  Well, this week was a head scratcher.  Earnings from big retailers showed slow growth and guidance was weak.  Walmart showed slowing sales.  GM was down.  Facebook and other advertising-based tech companies all showed slowing growth and weak guidance. And then the GDP report for Q2 showed almost another 1% contraction, confirming two straight quarters of negative growth to start the year.  By mid-week, most folk were confident in calling the “down-cycle” to continue.  But then on Wednesday, the EIA reported draws on crude oil, gasoline, and diesel.  The draws were a surprise that possibly demand was still intact at current price levels.  Then Ford and Amazon hit their numbers out of the park reversing the negative earnings trend for the week.  Biden and Xi met and are trying to “mend the fence” for China and America to work better together.  Ukraine and Russia struck some food supply export deals.  Europe is starting to get control of their nat-gas situation.  And no one believes that OPEC+ can increase crude production into the end of year.  Basically, market started to shrug off the fears.  Oh, and did I mention that the FED officially raised rates another .75%, confirming the two largest back-to-back rate hikes in over 20 years?  Even the FED announcement on Thursday did nothing to stop the markets grip on positive sentiment.  WTI Crude prices are climbing back to $100/barrel.  Supplies are tight, but we are winding down from high demand seasons across the globe.  Is the rally real, or are we setting up another head-fake going into the end of the year?  I believe the reality of where we are heading will start to flush out by end of September.  Until then, emotions on news stories will run the market.

In local news, gasoline and diesel prices continue to slowly drop.  Unless we have a major refinery issue in the Midwest, I do not expect to see gasoline retail prices above $4/gallon, and retail diesel should remain below $5/gallon.  The foundation is shaky, but it’s much better than last month.  Now we need to hope for a staggered harvest.  A rush-harvest could really cause some supply issues in the Midwest.  But that’s a couple of months down the road.

Propane is continue it’s skip along the bottom.  I can not continue to stress enough the value of propane at current prices.  Propane inventories are not in great shape right now.  We did not build national inventories to levels that I am comfortable with for this time of the year.  If we have a strong corn drying season and a cold winter, propane prices will go up dramatically.  In the past, Canada rail propane has been our savior.  But this year, new petrochemical factories have opened in Canada which will take most of the excess propane that could be shipped to the US.  I am not sounding any alarm bells or asking for panic.  I’m just saying that don’t relax on propane based on current market conditions and past experiences.  If you have not filled your tank this summer, please do so.  And I highly recommend contracting some propane for the upcoming heating season.

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

Best regards,

Jon Crawford

Good afternoon,

After Biden’s trip to Saudi Arabia, oil prices have failed to maintain any rally this week.  Demand erosion continues to threaten markets as fears of recession loom in the US and Europe.  The European Central Bank finally raised interest rates this week. In addition, mortgage demand in the US plunged to a 22 year low.  And to top off the week, Russia reopened their main natural gas line to Europe showing signs that maybe Russia will be unable to economically self-support a complete shut down.  WTI oil prices took a ride this week above $100/barrel but have settled out around $95/barrel for the week.  The Ukrainian “War Premium” is getting close to being wiped out of the futures market.  If oil supplies start to build around the globe, a race back to $70/barrel will be very possible.

As discussed last week, in local retail news, gasoline prices fell below $4 and diesel prices fell below $5/barrel.  I expect gasoline and diesel prices to hold near current posting into next week.  The drop in price is a nice little relief going into the end of summer.  I don’t want to jinx it, but we might have peaked on retail prices for the year.

Propane prices continue to skip along the bottom.  I really don’t believe there is much more downside risk in propane.  However, I do believe there is much more upside risk to propane this heating season.  We highly recommend that you order a summer fill and contract some propane for the upcoming heating season.

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

Best regards,

Jon Crawford

Good morning everyone!

Happy Friday!  Unfortunately I do not have much more to report after the long update last week.  Gasoline retail prices have officially blown out higher and surpassed the national average of $5/gallon.  Diesel prices are once again flying higher as well due to the tightest market I’ve ever seen.  This week, our refinery utilization surpassed 95%, leaving us less than 5% spare capacity in the US.  I’ve only witnessed this tight of a market a few times and they were short lived.  Crude prices also caught fire and WTI blew through $120/barrel this week.  World demand for crude is continuing to hold steady and we just cant’ shift supply needs around fast enough.  It’s like Wack-A-Mole!  Until demand drops significantly, we are going to be stuck, and unfortunately I see higher prices on the horizon.  Major banks thought consumers had about 6-9 months of spending runway left, but now they are revising the call down to 3-6 months.  And if crude prices blow out to $150/barrel, the consumers in America will be defeated by end of summer.

Gasoline retail prices are inching ever so closer to $5/gallon in Central Wisconsin.  And my call on diesel was way off.  I really thought we had diesel under control and gasoline was going to be the rocker ship.  But diesel retail prices are inching close to $5.50/gallon in Central Wisconsin.  If there is ANY refinery issue in the Chicago Spot market, we could see $6/gallon retail diesel and over $5.50/gallon gasoline.  Wowza…

Propane continues to be a dim light of hope.  Propane is now 60% cheaper than diesel when comparing BTU’s or available energy.  Propane has incredible value compared to natural gas and diesel right now.  I highly recommend cost-averaging during these volatile times and filling your propane tank now.  We hope to have our contract pricing for next season out in the next few weeks.  The numbers are starting to settle out and I’m cautiously optimistic for propane this year.  As long as crude production stays at record levels, propane should be able to remain less volatile than it’s neighboring products.  And for now, I see NO headwinds for slowing down on crude production.  If crude demand slows in the US, there are plenty of other countries that will take our crude and refined products!  The more crude production, the more propane!

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

Best regards,

Jon Crawford

Good morning!

I would like to say “Happy Friday”, but there is not a lot of happy news in this week’s update!  I’ve been writing for weeks that gasoline prices were primed to breakout higher in due to high demand and lower supply, but now diesel is hitching a ride to the moon along with gasoline!  The EU announced this week that they will be banning basically 90% of all petroleum imports from Russia.  The announcement sent shockwaves through the already very tight crude market.  WTI crude prices soared past $115/barrel, pushing gasoline and diesel prices over 30 cents/gallon higher.  OPEC is starting to see some cracks in their strategy.  The defacto leader of OPEC, Saudi Arabia, floated ideas of kicking out Russia from OPEC+ due to supply chain disruptions and unpredictability with quota production.  In addition to kicking out Russia, Saudi Arabia sent a calming message to the West that they will not let prices run away.  Many banks have been calling for $135-150/barrel WTI crude.  Saudi Arabia said those prices are unsustainable and they do not want to cause an economic collapse.  OPEC+ agreed to increase production quotas from 400k barrels/month to over 600k barrels/month for the next two months.  However, the world markets are skeptical that OPEC+ can deliver.  The US is continuing to pour out crude oil exports, along with diesel fuel to Europe.  There were major draws on our national petroleum inventories last week.  Quite frankly, I’m getting a bit concerned that we are not leaving ourselves enough wiggle room on diesel supply in America.  We only have 5% spare refining capacity left in the entire US!  The East Coast is in major trouble, and the Midwest / Gulf Coast are extremely tight.  The incentive for refineries to run is very strong.  But with all the exports going to Europe, we are just not able to get ahead on national inventories.  NOAA Weather is calling for a higher than normal hurricane season.  This could actually be a blessing in disguise for the Midwest.  Right now, Chicago refineries are shipping product to Nashville for East Coast deliveries, and down to the Gulf for exports.  In the past, the Gulf was the main refining source for the East of Rockies markets.  But over the last ten years, the Midwest has taken the refining crown from the Gulf Coast and is supplying more products to the  south.  Although hurricanes will shudder production, they will also shudder exports.  When the Gulf shuts down for hurricanes, demand also dies.  Therefore, hurricanes could actually give the Midwest a breather to catch up on diesel supplies going into the harvest.  There is no appetite for refiners to store barrels right now, so a lack of exports might give an opportunity for storage.  Although prices would increase, at least we would have spare capacity for the fall harvest.  As always, I do not see us getting out of the woods until the war in Russia is over.  I believe we are in for a very difficult summer and fall.  But the good news, is that I still see the energy markets starting to balance out in the first half of 2023.  The only scenario that allows the cooling of crude prices to come quicker is a world economic collapse.  Major banks are stating that the average consumer in the US has about 6 months of spending power left in the tank.  But if the prices of commodities stay hot, our consumer economy could start to contract faster than expected.  Any major economic contraction will start to pull down commodity prices.   Regardless, not much will change until after summer.

In local news, gasoline retail prices are moving closer and closer to $5/gallon.  In the RFG markets around Milwaukee, gasoline retail has already broken $5/gallon.  And I thought diesel was finally balanced out and going to move lower than gasoline retail, but just like that I was wrong.  Diesel retail prices have climbed back through $5/gallon and are now moving closer to $5.49/gallon!  The volatility of the energy markets is absolutely stunning and head-spinning right now.

The one bright spot in all this chaos is propane.  Propane prices continue to stay steady through the chaos.  Propane is now much cheaper to use for heat than natural gas and fuel oil.  Unlike natural gas and other refined products, we already know the maximum export capacity of propane in the US.  Therefore, we can do simple predictable math on the supply of propane in our country.  As crude harvesting and refining capacity continue to run red-hot, the byproduct of each process is the production of propane.  Propane inventories are now higher than they were at this point last year.  Now, we don’t want to be complacent.  We had very little corn drying demand last year.  But with the late planting season this year, corn drying demand could be very high.  We are still too early to predict, so we must be cautious.  For now, propane prices are at their lowest in six months.  If you have not ordered a summer fill, we highly recommend that you do so.  Contracts for next winter season will be released probably near the end of June.

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

Best regards,

Jon Crawford

Happy Friday!

I would like to wish everyone a safe and enjoyable Memorial Day weekend.  Even though we have so much on our plates right now, we should all take a moment and pause to remember that so many Americans have sacrificed their lives for defending our democracy and the United States of America.

Memorial Day weekend marks the start of the summer driving season.  Crude prices jumped much higher this week and my predictions for gasoline prices to rise is starting to happen.  OPEC+ has remained very firm to their quotas and show no signs of increasing production.  The US crude production is continuing to increase at a predicted clip.  But US refining capacity is maxed out.  Therefore, with diesel inventories finally getting under control, the spike in gasoline demand might put refiners at a breaking point.  I still believe the potential for retail gasoline prices to breach $5/gallon on a national average is possible.  The US petroleum industry is in a very scary position.  If there are ANY hiccups in refining, prices of gasoline and diesel will skyrocket.  There is no spare capacity in any spot market to plug any disruptions to supply.  In addition, the EU and Hungary are looking to deal on banning more Russian petroleum products.  And China is reopening their economy with discounted crude purchases from Saudi Arabia, UAE, and Iraq.  All of these discounted shipments will hurt the ability for the US to import the much needed Middle Eastern crude for the East Coast refiners.  Although the FED continues to push for more and more rate increases to tame inflation, the only way I see prices at the pump dropping are a slowdown in the US economy.  Although there are over 11M jobs available in the US, over 1M people filed for unemployment last week.  Our economy is in a very strange and unknown territory.  And now the median price of a home in the US is now 8x the median US household income.  The next six months will be very volatile and interesting to watch.

In local news, gasoline cost continues to rise so I expect prices at the pump to go up over the coming week.  Diesel prices have remained more stable since coming off from the highs a couple of weeks ago.

Propane prices are actually starting to rise.  We are currently delivering propane for the lowest price of the last five months.  If you can hold 200 gallons, I would recommend placing an order for a summer fill.  You are always better to “cost average” on your propane purchases than take larger one-time gallon purchases during these volatile periods.  Our contracts for next heating season should be coming out at some point by the end of June.

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

Best regards,

Jon Crawford

Good morning!

Although crude oil prices continue to trade in a narrow range, refined products are just a mess across the United States.  The United States continues to export refined products and crude oil to help alleviate the supply disruption from Russian sanctions.  But we cannot put enough products into the market fast enough.  We did experience a slight reduction in crude prices this week when the United States announced that they would allow a variance in sanctions on Venezuela to allow Chevron to negotiate crude purchases for American refineries.  But the relief was short lived due to China announcing plans to reopen the economy.  As I have been writing for a while now, we don’t necessarily have a crude oil problem.  We have a refining and logistics problem.  We don’t have the world capacity to refine product fast enough or move those products to places of need efficiently.  And because refiners maxed out refining capacity to make diesel, gasoline is in shorter supply going into a driving season that does not seem to be slowing down.  Many believed consumers would change spending habits at these prices.  THey are not.  Gasoline prices jumped much higher this week on anticipated supply issues.  Couple our refined product shortages with the driver shortages, and you will see gas stations running out of fuel this summer.  In fact, I would expect all gas stations to run out of fuel at least once this summer if demand stays strong.  So if you get to a station while traveling this summer and they are out of gas, go easy on the staff.  🙂  It’s a mess out there folks!

In local news, diesel supplies seem to be finally balancing out from planting season demand push.  But gasoline prices out of the Chicago market have rocketed higher.  Gasoline retail prices could easily approach $5/gallon in the coming months.  So as diesel retail prices come down to earth, gasoline retail prices could shoot to the moon.

Propane prices are now at the lowest price in months.  I am starting to suggest customers taking delivery in the coming month or so, or at least 200 gallons if possible.  A strategy of “cost average” is the best for the coming year.  Do not try and time the market.  The volatility is still too extreme to place big bets.  Contracts for next heating season will start to come out in June.  Stay tuned for more info!

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

Best regards,

Jon Crawford

Good morning,

Unfortunately I do not have any good news to report this morning.  Back in 2020, the IMO (International Maritime Organization) lowered the allowable sulfur content in diesel fuel for international shipping.  At the time, the change was going to disrupt the world diesel production and cause massive pain points in world diesel supply.  Well, Covid hit and the fears of the IMO Standard came and went due to decreased shipping demand.  The refiners of the world were able to slowly retool to capture the market change.  Everything was scaling out properly until the war in Ukraine started.  Now the world is trying to reorganize the entire diesel supply chain while shipping is coming back to full strength.  What we thought could happen in 2020 is happening right now.  World diesel supply is an absolute disaster right now that will not get better until maybe next year.  There is not enough refining capacity to meet world diesel demand due to shuttering the Russian supply.  There is spare refining capacity coming onboard across the globe in the coming year, but until then, I don’t see much relief for diesel.  And unfortunately, if diesel prices stay high, all goods and services will remain high in price regardless of raising interest rates or dropping tariffs on Chinese imports.  Inflation has not peaked and until diesel prices ease, we are in trouble.  Congress is trying to pass a law punishing oil companies and retailers saying we are price gauging and taking advantage of customers.  Biden wants to drop import tariffs on China.  The FED wants to keep raising interest rates.  All of the these scenarios would usually lower oil prices which lowers inflation.  The problem is physical supply, not a weak dollar.  OPEC is struggling to keep up with oil production and exports.  The US is shipping out our reserve oil to Europe.  This week the IEA released their disappointment with Biden releasing such a massive amount of reserve oil without asking the IEA.  The IEA believes the move plays into the hands of OPEC because OPEC can ride it out.  I wrote about that scenario a few weeks ago with “Too Much Too Late”.  Although our dollar is trading at incredible strength, demand is eroding in China, and the stock market is in correction, inflation will be with us in the United States with no relief in sight.  I have been writing for a month now to watch the price of diesel, not the price of gas.  I hope everyone has a good job and plenty of savings, because at this rate Christmas could be cancelled by the Fourth of July….

After dropping in price to start the week, gasoline and diesel prices ripped back higher.  Gasoline retail will be holding well above $4/gallon and diesel retail near $5/gallon for possibly the next few months.  I just don’t see much relief in sight.

Propane prices continue to trade in a narrow range as the national inventories start to rebuild.  So far, inventories are rebuilding at a decent rate.  We are not out of the woods into the “comfort zone” by any means, but I’m cautiously optimistic.  I still do not see much relief in prices for summer filling.  With crude prices remaining strong, propane price just doesn’t have the room to fall.  Stay tuned for next season’s contract prices.  We hope to have something out in the coming weeks.

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

Best regards,

Jon Crawford

Good morning,

Happy Friday.  As I have been writing, we need to watch the price of diesel as a predictor of our economic future.  This week diesel prices continued their surge with the East Coast toping over $6/gallon at retail.  In our local markets, diesel retail is now over $5/gallon!  Crude prices have surged higher again with the EU coming ever closer to an embargo on Russian crude.  OPEC+ has voted to continue their “trickle level” of increase in monthly crude production.  Even though the FED enacted the largest rate increase in decades, crude prices continue to surge.  With the war in Ukraine not letting up, I fear we are in for a long-haul with these energy markets.  Natural gas has officially hit the highest price since 2008 and shows no signs up letting up.  Utilities will be forced to increase rates into next season, so heating costs will be much higher for consumers next winter.  The energy markets remind me of the crisis in 2014.  Although the skies are very dark right now, the coming years are looking much better.  The amount of crude oil production and refining capacity coming online in the coming 12-24 months is very robust and should not only stabilize the world market but build to surplus.  I believe we are reaching the boiling point in consumer based demand at the current retail price of energy.  If these retail prices hold for a few more months, a decrease in demand will occur and prices should start to relax.  But a true collapse in energy prices will not occur until world supply is more stable.  Hopefully we will start to see the sun poke through these storm clouds by the end of the year.

In local news, diesel retail prices shot over $5/gallon.  Gasoline retail is about to shoot over $4/gallon going into summer driving season.  If these prices hold for a significant amount of time, consumers will start to change behaviors.  And unfortunately, I’m just not sure there is anything the US can do anymore to stop these prices from surging.

Propane prices are continuing to trade in a narrow range compared to other commodities.  Production of propane is very strong and inventories are building nicely going into summer.  The big unknown is going to be corn drying demand.  With crops getting such a late start in the season, the potential for increased dryer demand is on the table.  The good news, although propane prices are higher than average right now, the cost of propane to heat is cheaper than natural gas right now.  We will be sending out contract information for next heating season in the coming months.  I’m not sure retail prices will go much lower for summer, but we should know more by the start of June.

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

Best regards,

Jon Crawford

Good morning!

Happy Friday!  Another wild week in the energy markets.  Crude prices continue to rebound higher as traders shake off demand headwinds from China and their lockdowns.  The hot potato is still the Ukraine/Russian war.  Germany is warming up to cutting off Russian crude imports.  As the oil market continues to try and balance with a disciplined OPEC+, supply disruptions from Libya and others, and the US not able to ramp up as quickly as our government wants, higher prices for crude will continue to be supported in the near term.  Russia is also demanding payment in rubles and shutting of natural gas supplies for those who don’t pay.  Some are worried the payment in rubles could spread over to crude as well.  The instability of Russia’s action with payments is increasing volatility on all commodities.  The good news is that OPEC+ is staying true to production increases the best they are able and the US is plowing ahead with adding more oil rigs.  Germany is also opening back up the North Sea for crude harvesting.  In addition, refining capacity across the globe is also expanding.  So although we are in for a nasty ride of volatility and high crude prices for 2022, I see much lower prices going into 2023 and beyond.  Even though supply is quite bullish now, we are facing some bearish sentiments on the horizon.  The value of the US Dollar is shooting higher which usually lowers energy prices because crude settled in dollars.  And some economic headwinds are forming in the US with inflation on all goods and services, potential housing crisis looming, and a labor supply problem that is not getting better.  If a recession hits the US at some point this year, crude prices will most certainly drop.

In local news, the refinery issue in Chicago came from Bp Whiting, the largest refinery east of the Rockies.  The production shutdown caused a massive spike in Chicago sport price.  Unfortunately, the Group had been struggling with supply, so a shifting of barrels was not as easy as usual.  Then, a short squeeze developed on diesel barrels as an arbitrage for the May to June contract shift developed.  The east coast diesel cost is almost $1/gallon higher than Chicago market!  Pricing diesel spot price right now is like throwing darts at a chalkboard.  And as I have been saying, if you care about the state of the economy, watch diesel prices, not gasoline.  There is still enough money in the system yet for consumers to afford these gas prices for a while.  But if diesel prices continue to climb at these current rates, prices of everything will continue to go up.  Diesel literally fuels our economy.  So until the May contract closes out and June opens next week, we are in some choppy trading waters.  I would not be surprised to see diesel retail prices in our market eclipse $5/gallon next week and gasoline retail eclipse $4/gallon.  If the arbitrage calms down on the spot market, we could see prices ease and not break through my predicted ceiling.  Once again, I hope I am wrong!  🙂

Propane prices jumped last week as the winter weather continues to drag on.  Although national supplies are starting to rebuild, the issues with the EU needing so much LNG is putting pressure on potentially increasing propane exports as well.  I get worried that the US will over-promise and deplete our much needed reserves at home.  But we still have plenty of time.  For now, I don’t expect propane to move much lower in price.  Next season’s contract pricing will probably come out in June this year.  So stay tuned for more info!  If you are a will-call customer, remember to check your tank!  This cold weather is surprising a lot of customers and causing runouts!  🙂

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

Best regards,

Jon Crawford

Good morning!

Happy Friday!  WTI crude prices continue to remain above $100/barrel as the war in Ukraine rages on.  Crude prices soared on OPEC+’s commitment to their production strategy and the EU ending Russian imports by year end.  Libya also lost control of a major production facility to political insurgents.  The loss of Libya production coupled with draws in US inventories being exported pushed WTI closer towards $110/barrel.  But then Germany threw some cold water on the party saying that they are reopening a ton of oil wells in the Black Sea that will replace Russian imports by years end.  Then the FED said that 50 basis point rate hikes are on the table for the out of control inflation plaguing our country’s economy.  And China’s economic “reopening” is not going well at all.  There are now four times as many ships sitting outside China waiting to unload and load as there were in 2020 when the the world shut down.  If we thought supply chains were a mess before, hold on to your hats!  I believe our supply chain issues could see the hardest times yet this summer!  The end of week news pushed WTI crude back down towards $100/barrel.  Although the prices for crude dropped nicely, the prices for refined products in certain spot markets did not follow accordingly.

In Chicago, a refinery maintenance issue coupled with upcoming summer demand has caused cash basis spot pricing on gasoline and diesel to skyrocket.  The cost of gasoline is now almost 30 cents per gallon higher than it was a week ago, and diesel cost is now over 40 cents higher.  Our market in Wisconsin, is mostly based on Chicago spot pricing along with the Group to the west.  The Group was already struggling to keep supply steady, while Chicago was offering steep discounts to help move supplies.  Now, the tables have flipped.  Chicago spot market is now HIGHER in cost compared the Group.  The flip in economics means that the retail price of gasoline and diesel is going to be much higher next week.  I expect to see gasoline retail price hit or exceed $4/gallon and diesel retail prices to hit or exceed $5/gallon.  Unfortunately, we have a LONG way to go before gasoline and diesel prices settle down.  I am now predicting that gasoline retail will be between $3-4/gallon and diesel retail $4-5/gallon for the remainder of the year.  It’s the one prediction that I hope I am wrong!  🙂

Propane prices are holding very firm on skyrocketing natural gas costs.  As natural gas prices rise, companies look to propane as an alternative fuel for production.  And since Canadian inventories are very low, as well as America’s inventory, the markets are going to price propane accordingly to try and keep as much on hand to help avoid a supply crisis next winter.  The late season cold weather is keeping propane inventories from building into next heating season.  The longer lasting cold is also pushing off the planting season for farmers which raises the probability of a later harvest.  And usually a later harvest means more crop drying demand because farmers lose a month of natural drying weather during optimum crop growth maturity.  For now, I do not expect to see propane prices move much lower.

As always, if you have any questions, comments, or concerns, please feel free to contact us!

Best regards,

Jon Crawford