Correction Hits the Crude Market

Good morning,

The crude markets went into correction last week and gave back almost $6/barrel.  In addition, refinery maintenance in Chicago started to finish up causing winter RVP to flow into the cash price point in Chicago on gasoline.  Saudi Arabia and Russia keep hinting at a private side deal to secretly raise output starting in November.  The IEA also lowered their demand forecast for 2019.  And hurricane Michael destroyed demand down south, including most of the infrastructure along the panhandle in Florida.  Also, in a surprise, President Trump is discussing variances for purchases of Iranian crude for countries that tried to curb purchases in the past months.  And last but not least, economic downturn in China and the U.S. due to trade wars overtook the airwaves for a few days as well.  All of these events caused a major downturn in crude prices.  The main event going into this week is the political tension between Saudi Arabia and the rest of the world surrounding the disappearing journalist.  Any major announcement of sanctions could cause a spark for retaliation which in turn could make crude prices soar.  All eyes are on deck.

In local news, retail prices for gasoline and diesel are starting to slowly come down.  I would expect prices to slowly ease depending on what happens this week.

Propane prices climbed in the past week due to an increase in demand and potential supply tightness going into winter.  In addition, corn drying is in full swing.  We expect propane prices to continue to climb going into winter unless crude prices collapse.

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

Best regards,

Jon Crawford – Pres.

Crude Prices Have A Fever of $100/Barrel

Good morning,

As you may have noticed, the price of fuel has been rising at the pump.  As the sanctions against Iran are getting closer to kicking in, traders have caught a nasty fever.  The fever of the magical $100/barrel crude price is on and traders are putting their money where their mouth is.  Right now, the net long positions on crude oil futures hit historic levels again.  This week OPEC and Russia reminded the world that the Iran sanctions were put in place by the U.S., not them.  Therefore, they are a bit reluctant to come out and rescue the world from higher prices.  However, many believe that Russia and Saudi Arabia are secretly putting more oil into the market leading up to the Iran sanctions in November.  Under the current market conditions with the Iran sanctions coming, I do believe that Brent prices could touch $100/barrel in the coming months.  But I’m also a huge fan of history.  Every time we see this amount of hedge fund money pour into crude at a frantic pace, a correction is around the corner.  And in recent years, the correction comes sooner than later.  I believe that by the end of November, there is a potential for prices to unwind, especially by year end as traders take profits on the tax breaks based for this year.  Unfortunately, this means that high prices at the pump are probably here for at least two more months.

Retail prices on gasoline and diesel are climbing not only due to the rise in crude prices, but also because of refinery maintenance at facilities in the Midwest causing supply constraints.  I believe that gas prices will stay under $3/gallon and diesel prices under $3.49/gallon for a bit here.  But if the $100/barrel fever doesn’t break in the coming weeks, at the end of the month we could see gas prices breaking $3/gallon and diesel climbing over $3.49/gallon.

Propane prices continue to baffle me.  Inventories across the country are at the same level as last year.  But the cost ratio of propane to crude oil is low.  Corn drying demand is low and much of the tobacco crop was destroyed out east.  So for now, propane prices will remain stable, but any demand event could cause a large spike in price.

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

Best regards,

Jon Crawford – Pres.

Quick Update

Good afternoon,

I’m sorry to bring bad news on prices going into the weekend.  Prices are continuing to dramatically climb due to a rise in crude oil prices.  The rise is being blamed on upcoming Iran sanctions going into affect the first week in November which has the potential to cause a global deficit in crude supplies.  In addition, there are major issues with refinery and pipeline maintenance in the Midwest.  Prices for diesel and gasoline are in a 15 cent spread at most terminals throughout the state.  In addition, the only pipeline bringing product into Madison will be down for 10 days in October.  I expect to see retail prices at the pump continue to climb for both gasoline and diesel.  The high prices will remain until the maintenance season is over in mid-October.

The timing is awful with farmers starting to harvest.  If demand picks up we could see differential price blow outs push this dramatically higher.  The cold temps are also ticking up propane demand which is set for a price jump as well.

Unless crude oil drops $5-10/barrel, I would expect to see current prices on all refined products to stay high for another 3-4 weeks.

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

Best regards,

 

Jon Crawford – Pres.

 

Hurricane and Record Production

Good morning,

Another wild week in the crude trade.  We started the week with Hurricane Florence coming to the U.S.  The potential threat to East Coast pipelines and shipments caused a nice upward bump in the price of WTI.  Then on Wednesday the EIA reported a large drop in crude inventories but a massive build in all refined products.  Traders digested data and crude prices started to move sideways.  The drums have been beating for weeks that the market is tight and that the loss of Iran and Venezuela crude is putting upward pressure on crude prices.  But on Thursday, the IEA and the U.S. reported news that in August, the world produced a RECORD amount of crude, even with the losses from Iran and Venezuela!  In addition, the U.S. overtook both Saudi Arabia and Russia to become the world’s number one producer of crude oil at over 11 million barrels per day!  The news caused crude prices to drop like a rock sending refined product prices back to the level before the hurricane was reported on Monday.  Wild ride…  So for now, we are holding on Friday waiting to see how Hurricane Florence plays out.  I am still a bit bullish on crude going into the end of year, and I’m not convinced that won’t see some refinery maintenance issues in the Midwest causing some local price spikes during the fall harvest.  More to come.

In local news, gasoline and diesel prices have been pretty stable around the $2.76/gallon on gasoline and $3.09/gallon on diesel.  With the market making big moves both ways, we are still maintaining an average that will probably continue to hold these prices at the pumps.

Propane continues to baffle me.  Prices have remained fairly calm.  With national inventories below the five year average coupled with mother nature’s history so far this year, I’m worried that any jump in propane demand is going to cause a major price spike.  I continue to encourage everyone to lock in their propane prices for this winter and fill their tanks now to ensure being full before the temperature changes.

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

Best regards,

Jon Crawford

Price Peak For Now – Flooding Not Over

Good morning everyone,

We continue to monitor flooding in our area and wish everyone’s safety over the next few days.  If you need any help, please feel free to contact us.  If any propane tanks or refined fuel tanks have been affected, please reach out to us immediately to ensure your safety.  Hopefully the dry forecast for the next week is accurate and waters can start to recede.

Crude oil prices continue to be under pressure from the trade war with China and now a possible trade war with Japan.  The strength of the dollar is putting a cap on upward movement in WTI crude prices.  I am surprised by the current downward trend due to drop in inventories.  There are a lot of eyes on world demand and potential slow down in China and India’s economies.  However, China and India have made it clear that they will not comply with sanctions on Iran and will continue purchasing crude.  So the summer of “chaos and excitement” in the crude oil market is going to continue into fall.  I am still bullish on crude prices.  Within OPEC, the largest driver of price, Saudi Arabia, does not want to see prices go much lower.  And they have shown over the last two months that they will do whatever is necessary to keep WTI crude above $65/barrel.  For now, enjoy a little dip in price, but I’m not seeing this trend last until the end of the year.

In local retail news, prices are fairly stable.  I expect to see retail prices on gasoline and diesel hold over the weekend into next week.  With harvest and refinery maintenance coming up, we could experience some local price spikes in the coming months.  Stay tuned for more info.

Propane rack prices have leveled off for now.  However, future prices for this season have continued to blow out into larger than normal spreads.  I highly recommend that everyone lock in their propane prices.  There is a major gap in price between Midwest and Gulf Coast propane.  Supplies are under the five year mark, and a “colder than average” winter is being called.  Right now the propane market is showing cards for a potential price spike this winter.  January through March of 2019 could be very ugly.  Please call our office today and lock in your price for the coming heating season.

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

Best regards,

Jon Crawford

Flooding, Tornados, and Safety Announcement

Good morning everyone,

I would like to first of all say that our thoughts and prayers are with our customers and friends affected by the recent tornados and flooding.  We are so sorry to see the damage and lives affected by these storms.  If you need any support or help, please call us.  We are happy to help and assist in any way that we can.

I would also like to say that if you have fuel tanks or propane tanks on your property that you believe might be damaged or were compromised due to the storms and flooding, please contact us and we would be happy to inspect.  If you feel the situation might be unsafe, please call.  We would rather you be safe during this stressful time.

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

We wish everyone continued safety as the clean up continues.  And please, do not hesitate to ask us for help.

Best regards,

Jon Crawford – Pres.

The Great Unknown

Good morning,

Crude oil prices have continued a downward trajectory of over $10/barrel since June.  Prices are starting to stabilize around the $66-69/barrel for WTI.  There are so many bullish and bearish issues affecting prices right now.  Iran sanctions coming online in November, countries not following sanctions, Iran threatening to block passage of crude ships, Saudi Arabia cutting production instead of increasing, US increasing production to record levels, major oil producer in Canada back online shipping over 1.5M barrels/day back to the US, US/China trade war, US/Turkey economic conflict, OPEC arguing over upcoming quotas, demand is starting to fall, ships of crude are starting to pop up in places without a home, IEA changed their outlook again on demand, and futures traders liquidated over 30% of their bullish positions for 2019…… WHEW!…. that’s a lot!…  So what’s going to happen?  Right now it’s a day-by-day trade.  Feels like the pot is boiling and it could boil over or someone could turn down the heat.  I’m just not confident on taking a hedge position at this time.

In local news, retail prices for gasoline and diesel have started to ease.  However, there was an announcement of a major turnaround this fall at the Bp Whiting refinery.  This could cause some major price spikes during harvest season.  More info to come.

Propane prices have continued to move up as we go into fall.  Inventory levels are below the five year average and many are calling for a colder than average winter.  I highly recommend that everyone fill their tanks now and contract propane for the 2018-2019 season.

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

Best regards,

Jon Crawford – Pres.

Whipsaw on Crude Prices This Week

Good morning,

I hope this message finds everyone well.  This week has been very interesting for the crude markets.  We experienced a good price jump higher on Tuesday based on news of the strict sanctions Trump is looking to enforce on Iranian crude exports.  In addition, the API Inventory report showed a large crude draw and flat levels for gasoline and distillate.  But then on Wednesday, China announced tariffs on US Crude Oil imports and the EIA reported a much smaller draw in crude supplies coupled with a massive build in gasoline and distillate inventories.  The China news and EIA report, along with the announcement that other countries were not going to play along with Iranian sanctions, caused a 3.2% drop in crude prices, pushing WTI through the support price of $67/barrel.  So for now, we are looking at the $67-70/barrel range for WTI prices.  Crude prices are basically controlled by headlines at the moment, so it’s a very volatile and unpredictable trade at the moment.

Retail prices on gasoline and diesel have eased a bit since last week.  I expect prices to hold throughout the weekend.  Right now summer demand for gasoline in Wisconsin is down compared to last year.  I believe that the intense amount of road construction along with higher prices have dampened travel plans this summer.

Propane prices have started to rise.  Inventory levels across the country are sitting around the same level as last year.  Analysts are worried that intense cold will put pressure on supply.  Unless we make up some ground in inventory levels across the country, the potential for a price break out on propane this winter is very high.  But I want everyone to know that Wisconsin is in great shape for supply crunches.  There have been five new rail terminals along three different railways added in the last two years, including upgrades to current facilities and retail storage capacities.  If you have not filled your tank this summer, please do so.  And if you have not locked in your prices for the winter, I highly recommend that you contract your gallons by the end of August to ensure a good price.

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

Best regards,

Jon Crawford – Pres.

Thank You To Our Customers!

Good afternoon,

I just wanted to take a quick moment and thank everyone who came out to our Customer Appreciation Day on July 27th.  We served over 500 people and had the best weather you could ask for!  I am so happy to celebrate our customers each and every year.  I also wanted to say congrats to Sydney Simonson on winning a pair of Packers tickets in our raffle.  We hope you enjoy the game and you help the Pack bring in a win! 🙂

In market news, crude oil prices dropped almost 10% in July and are starting out down in August.  We are expecting to see retail prices remain around the same since local cost of fuel increased with the expiration of the August contract on the Chicago Mercantile.  I am keeping my eyes on the trade wars, Iran and Russian communications, as well supply point bottlenecks to see where we might go in August.  I am still long on crude prices going into the fall and next spring.

Propane prices are holding steady.  If you have not ordered a summer fill, please do so.  Once summer economics expire in the propane market, I expect to see prices jump 5-10 cents.  I also highly recommend contracting your propane for the upcoming heating season.  I am very bullish on propane prices for the upcoming season due to low inventories and high export volume.

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

Best regards,

Jon Crawford – Pres.

Customer Appreciation Day Celebration- July 27th at 11am

Good afternoon!

I hope this message finds you all well.  Just a quick reminder that Crawford Oil and Propane is having their annual Customer Appreciation Day celebration at the Fort Bp in Portage on July 27th.  The event starts at 11am and includes free lunch, bouncy house, face painting, magic show, specials in store, raffle (grand prize two tickets to Packers game), and more!

Fort Bp is located at 1901 Hwy 33 E in Portage, WI.

Hope to see you all there!

Jon Crawford – Pres.