Monthly Archives: February 2019

On the Up and Up

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Good morning,

WTI Crude prices continue to climb towards $60/barrel.  As I have been writing, hedge funds took long positions on crude so bullish sentiment seems to be running the market.  I believe that we will see prices peak somewhere in Q2 of this year.  I think there will be an opportunity for hedge funds to ring the register around that time.  Earlier in the week though, we experienced a one day collapse in the rally due to President Trump tweeting at OPEC that prices are too high.  The market experienced a knee-jerk reaction to the downside.  However, the following day, the EIA reported a massive drop in crude oil inventories giving further support to the strength of US crude oil exports to China.  In addition, OPEC came out with strong messages following Trump’s tweet saying they will not be bossed around and the plan to cut production is well supported and underway.  This week again gives support to my idea that the market is on the bull train and will be for quite sometime until the hedge funds can ring the register.  In Q2, we will start to see how the economy will look going into summer and high demand season.  In addition, the FED will have some more input, and we will see where OPEC ends up.  For now, get your wallet out and expect to keep paying these prices for a few more months.

In local retail news, gasoline retail prices continue to climb towards $2.49/gallon.  I expect that we will experience at least $2.49/gallon at gasoline retail in most of the state sometime in March.  If winter continues to hang around, diesel retail prices will easily continue to hover around $3.00/gallon.

Propane prices are steady and actually dropped a little last week.  Production continues to be very robust and is beating demand at this point, even though winter is colder than last year.  Inventory levels in the country are strong and will end the winter season at high levels.  So depending on the price of crude, we could experience some very low summer fill prices this year.  For now, please make sure that your icy driveways are taken care of and that there is a clear path to your propane tank to ensure a safe and efficient delivery.

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

Best regards,

Jon Crawford – Pres.

Wait and See

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Good afternoon,

Crude prices continue climb causing gasoline and diesel prices to rise.  We are seeing WTI crude carve out a recent floor at around $55/barrel.  I’m not expecting that to change much until after the China/US summit in March.  For now, it’s a continuation of “wait and see” what the news throws out each day.  The FED is starting to look dovish again which is putting some downward pressure on crude price, coupled with continued increases in crude production in the US.  But Saudi Arabia cuts and sanctions against Venezuela and Iran are keeping the downward momentum in check.  At the moment, hedge funds have reentered the market with longer positions on crude adding to the temporary floor on WTI.  So far now, I expect WTI to continue its’ narrow trade range.

Local markets are continuing to see rising retail prices on gasoline and diesel, and I expect to see the trend continue.  Gasoline prices are well on their way to over $2.29/gallon and diesel prices at over $3.00/gallon are starting to pop up.  I don’t see these prices going away anytime soon.  For now, it’s wait and see until the end of March.

Propane prices are continuing to hold steady with increases in supplies.  Production is at record levels and currently we are 11M barrels ahead of inventory levels compared to last year.  I expect to see propane trade with crude for the next month or so, but we could start to see propane break away and fall once winter demand starts to diminish.  The only caveat is that is crude goes on a rocket higher, propane will follow.

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

Best regards,

Jon Crawford – Pres.

Prices Continuing to Climb

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Good afternoon,

Prices of crude oil continued their path higher this week settling at the highest close in the last three months.  We expect to see crude prices continue to climb as Saudi Arabia is cutting more than expected in volume, supply disruptions continue around the world, and sanctions on oil exports from Venezuela and Iran are hitting the marketplace.  In addition, China and US are entering a trade negotiation deadline that is starting to look hopeful.  Demand around the world appears to be healthy and OPEC seems set on keeping prices higher.  The economy does not seem to be slowing as much as expected in the US and China and overall sentiment seems to be bullish on crude prices.  I am seeing healthy prices through Q2 2019, but am on the fence from there.  Supply is very delicate and could easily slip into surplus at any moment.  But for now, emotions and sentiment are going to push crude along on its current path.

Retail prices for gasoline and diesel continue to be all over the map.  Many areas in the state are selling retail gasoline below cost.  The next couple of weeks will be interesting to watch as the marketplace continues to digest higher gasoline costs and reluctance to increase retail prices on the street.  Diesel cost is continuing to rise as well and $3.00/gallon street price is not far away.

Propane prices are also starting to rise with crude.  Although propane inventories are healthy and production is at record levels, cost continues to follow the crude market.  I just don’t see propane breaking from crude at this point in the year with a couple of winter months remaining.

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

Best regards,

Jon Crawford

Crude Prices Stable – Pump Prices Climbing

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Good afternoon,

Finally nice to have more normal winter temperatures again!  I hope everyone is staying safe with the crazy snow and ice storms.

Crude prices continue to trade in a narrow range based on the day’s news.  One day the economy looks great, the next day it looks awful.  In other words, whatever, hits the headlines in the morning drives the price for the day.  Crude production is very stable worldwide.  Even though sanctions on Venezuela are looking to hit the market soon, many countries have already vowed to continue to buy from Iran, so the potential for a drop in world production is limited.  My main concern is diesel production and prices in the US.  With sanctions against Citgo, we are putting a lot of pressure on other countries for importing heavy crude that is best refined for diesel.  The US does not produce any heavy crude.  In addition, our diesel inventory levels are below the 5 year average.  So going into high demand seasons, if we continue to limit diesel production, we are going to see our cost of diesel rise quickly.

In local retail news, the retail price of gasoline has now moved above $2/gallon and climbing.  Diesel retail prices are starting to move closer to the $3/gallon mark.  I expect to see retail prices continue to rise over the coming weeks as costs have increased dramatically over the past three weeks.

Propane prices have remained stable.  Although demand has been very strong, production numbers are robust.  There is just not a lot of fear for inventory loss in propane for the remainder of the year.  Please remember to keep your driveway clean and have a clear path to your propane tank in order to receive your delivery safely and efficiently.

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

Best regards,

Jonathan Crawford – Pres.

Arctic Blast Is Over!!!

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Good morning,

I hope this message finds everyone safe and sound coming out of the coldest weather experienced in 30 years.  Our company worked overtime and extra hard to keep everyone safe.  If the temperature climbs to over 40 degrees this weekend, it will be an 80 degree swing in 48 hours!!!  Regardless, I appreciate everyone’s patience as we worked in extreme temps to care for our customers.  And a special hank you to the customers who worked with us to help with spreading out deliveries to make sure those in emergency situations were taken care of you.  Your honesty and willingness to help was very much appreciated!

In world news, crude oil prices climbed 18% in January to start the year as I expected.  Crude oil prices were very undervalued to start 2019.  Now we are carving out a range of $50-55/barrel WTI until a few things flush out.  OPEC+ and their crude cuts will be under scrutiny in the coming months.  Mostly we need to see Russia stepping up to their commitments.  China’s economy is continuing to contract so the news is very bearish for crude prices.  But the contraction could bring China to the negotiating table on a trade deal which would be very bullish for crude.  Here in the US we just don’t stop pumping crude.  And the FED is probably deciding to hold off on rate increases which would hope to spark more demand in crude in relation to the devaluing of crude prices.  So February is going to be an interesting month for watching data.  I think after this month we will have a better idea as to where crude prices might be heading.  More to come.

In local news, gasoline prices are starting to pop up above $2/gallon.  I expect to see the trend continue as gasoline cost basis in our area jumped higher this week.  Diesel prices continue to climb as well.  I expect to see diesel prices at the pump continue to rise as well.

Propane prices have remained stable with high production and high demand.  Propane is in a spot of homeostasis.  So if demand erodes or production quits, hold on.  Things could change quickly.  For now, please make sure your driveway is clean and clear to make sure we are able to safely and efficiency deliver propane to your house.

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

Best regards,

Jon Crawford – Pres.