After entering into correction, WTI pricing has whipsawed back to above $62/barrel. With the dollar recovering from the low and production increasing in the U.S. and Nigeria of OPEC, many of us are scratching our heads at the quick claw back in crude pricing. In addition, Iraq is investing in more production, and if Nigeria is truly cheating on quotes, I wonder how much longer others will hold out. Russia has been stomaching their quota but their players in the country really would like to increase production. I’m thinking that maybe crude recovered much like the DOW. There was still money left on the table from the tax cuts and record profits to throw into the market when the first round of selling triggered across equities and commodities. At this point, I’m sticking with what one trader called earlier this month “the appetizer before the meal.” I really do think that crude will come back down below $60/barrel one more time this spring, possibly in March. If the Fed raises rates in March, pressure on crude will mount. Also, traders will have to decide if they want to cash out of crude in Q1 and move the money into something else.
In local news, retail prices are all over the board. In a 45 mile radius from Madison, retail prices on gasoline have ranged from $2.35 to $2.49. Diesel prices are starting to ease a bit as #1 ULSD blends fade out a bit. Just as prices were going to break into the possible teens on gasoline, crude clawed right back.
Propane retail prices have a eased a bit from the highs. We expect to see prices go down from here for the rest of the heating season into spring. Summer fill and contract information for 2018 will be available closer to June/July.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Jon Crawford – Pres.