Monthly Archives: December 2018

Merry Christmas and Happy Volatility!!!

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Good morning,

I hope everyone had a safe and Merry Christmas!  The weather was nice for travels and fuel retail prices were low for keeping some extra spending money in your pockets.  The last few days have been an absolute wild ride.  On Christmas Eve, the stock market and crude oil futures posted one of the worst sell offs in history.  The causes were fear of economic downturn in 2019, surplus crude oil supplies overtaking demand, Munchin giving a weird call to the banks to try and calm markets, OPEC not cutting enough, record US crude production, and the US Government shutting down.  Then we had Christmas and a day off.  And then we woke up yesterday to a completely different outlook.  The outlook included the following gems: crude oil supplies might be in balance soon according to OPEC;  OPEC, Russia, and Canada are all willing to cut even more supplies and sooner if needed; economic outlook is very positive for 2019 with high demand for crude oil; record spending on retail for the holidays; and overall “everything is awesome and gonna be great in 2019.”  The sentiment change caused a volatile record day gains in the stock market and crude futures…. Our troubles are over!!!…  The sell off is over, crude has bottomed, and December was a fluke…  Then we woke up this morning and the markets are selling off again.  So basically we have markets that are out of control and I say “get out of the way.”  Traders are desperately trying to call a bottom but it just doesn’t want to show its face yet.  So for now, sit back and watch probably the bumpiest ride in the market since the last correction.

In local retail news, retail gasoline has hit $1.99/gallon in the surrounding market areas.  Diesel retail prices are holding near $2.79/gallon.  I don’t think we will go much lower at the pump.  But I also don’t see it going back up anytime soon, especially since we went below $2.00/gallon on gasoline at the pump.  Once that “1” comes out in front on the price signs at the street, it’s very hard to put the “2” back up.

Propane retail prices are holding steady on good demand.  Inventories are around the five year average.  Although we had some warm weather here in December, don’t forget to keep your hat and mittens handy.  Some cold weather is on the way with some arctic blasts possible in the middle of January.  Stay tuned for more info.

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

Have a safe and Happy New Year’s celebration!

Jon Crawford – Pres.

ALERT: Online Order Issue

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Online Order Service Issue

If anyone placed an online order in the last 10 days, please call our office. Our IT company placed a spam filter on our account without our knowledge and orders were lost for the past week. We apologize for the inconvenience.

The issue has been addressed and fixed.

…

Thank you!

 

Fundamentals Ignored

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Good morning,

Traders continue to ignore fundamentals and have abandoned all hope on investing in crude.  WTI crude dropped below $50/barrel and is fast approaching $45/barrel.  The main driver is a fear of economic meltdown in 2019 causing demand destruction coupled with over supply.  Currently the U.S. is exporting more crude than importing and our production is at record levels.  In addition, Russia is pumping strong.  However, demand is still strong in the U.S. and crude inventories have dropped a bit in the U.S.  And world demand continues to be strong.  Also, the Middle East is continuing to struggle with geopolitical issues, the largest Libya oil field is under siege and out of production, and Saudi Arabia is cutting production more than expected.  In other words, when looking at supply and demand, we are moving closer to a crude deficit than a surplus, coupled with extremely volatile geopolitical issues.  But traders are staying on the sidelines and buying the rumor of economic meltdown in 2019.  So for now, we sit back and wait.  There is a potential for the bottom to fall out, but the true fundamentals point to higher prices.  The crude market is now trading on emotion which is scary.  Therefore it’s best to stay away and wait for a bottom to be carved out.  There is a tremendous opportunity at these low prices, but I’m not 100% in until a bottom is carved out.  At the end of the day, there is still more long term risk of higher prices as compared to lower prices.  The question is, how long will these lower prices stay?  That’s the billion dollar question and only time will tell.

In local news, retail prices on gasoline are ever so close to $1.99/gallon in Central Wisconsin and will probably get there.  Diesel prices have now moved below $3.00/gallon and will probably stay there for some time.  These lower prices will help for the holiday travel season coupled with warm weather.

Propane retail prices have remained steady as we experience a lull in demand before January.  For now we are predicting a cold January.  The weather is looking to change around the end of December and move colder into January with a deep freeze possible by the middle of January.  The analog data is also starting to show that February could be very cold as well.  So enjoy the warm Christmas weather because this could be the last warmth for a couple months!

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

Best regards,

Jon Crawford – Pres.

Tug of War

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Good morning,

Crude prices this week are stuck in a game of “Tug of War” right now between geopolitical issues and true fundamentals.  Global recession fears are weighing on traders’ minds as we end the year which is keeping “Big Money” from going long on crude.  The fears are weighed by China/US trade war, disappointing economic data, and BREXIT drama.  Not to mention that Saudi Arabia and Russia continue to make headlines which have potential for supply issues.  But in true fundamentals, the US exported more crude than consumed last month.  So there are buyers out there.  It’s a head scratcher.  Big Money is stuck on short positions right now which I think will hold until the end of the year.  I feel that money managers are going to look at January as a potential entry point on crude.  So for now, enjoy the Christmas gift that the traders have given us!  But when Big Money enters the market, be prepared for a quick increase in crude prices.  And I do believe it’s not a matter of “if”, but “when”.

Retail prices on gasoline and diesel have stabilized for the moment.  We are looking at around $2.15/gallon on gasoline and $3.00/gallon on diesel.  I think that these prices will hold potentially for the end of the month.

Propane prices have also stabilized but are starting to carve out the potential for an uptick.  Demand is rip-roaring right now.  The current warm spell is looking to end by Christmas, with the potential for colder than normal coming back, including a possible Polar Vortex in early January.  As always, please make sure your driveway is clear and there is a path to your tank this winter.

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

Best regards,

Jon Crawford – Pres.

OPEC Meeting Disappoints

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Good afternoon,

The big OPEC meeting today in Vienna did not impress traders.  Hopes were for over a 1.5M barrel/day cut, and that does not look like it will happen, even when Russia weighs in tomorrow.  In addition, the economic outlook is starting to look weak for the U.S. which is causing a massive sell off in the market.  To top it off, China and U.S. trade tensions are high with summit talks being interpreted differently between the two countries as well as Canada arresting an executive from the Chinese firm Huawei.  The traders have reacted by selling off even more crude contracts.  WTI crude prices have now dropped back to their lows for the year.  The bullish news being reported was a major drop in crude supplies here in the U.S., Iran threatening to block the Straight of Hormuz, and Canada offering to cut crude production to help prop up prices.  For now, traders seem to think the world is entering closer to surplus on crude supplies and bearish news on the economy is winning the war of words.  For now, cheap oil prices are maybe here to stay until year end.  We will need to wait for Russia’s reaction as well as OPEC’s official report.

In local news, retail prices on gasoline have bottomed out near $2.19/gallon, and retail diesel prices are right around $3.00/gallon depending on the winter blending applied.  I would expect to see these lower prices through Christmas.  So for now, we can enjoy some lower prices for the holiday season!

Propane prices have bottomed as demand continues to climb.  We officially experienced the coldest November on record.  For all will-call customers, please make sure to keep an eye on your propane tank.  Usage is up more than 20% this year.  As a reminder, please make sure to have yoru driveway cleared and a path available to your tank throughout the winter.  We appreciate all your help for making safe and efficient deliveries. 

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

Best regards,

Jon Crawford – Pres.