Softness In Chicago Market

Good morning,

Headlines around a softening economy and lower refinery runs continue to weigh on crude prices.  Economic data is starting to spoke investors as they continue to move money out of long positions on crude.  WTI is looking to close below $55/barrel this week.  Many firms are lowering outlook for crude prices into 2020 as well.  History shows that crude prices tend to stay low during election years as well.  As conditions in Syria hold some Middle East tensions, OPEC continues to say they will cut production to keep prices from falling off a cliff.  Considering that the next meeting is not until December, I believe OPEC is scared that crude prices could fall through a trap door and collapse.  For now, I think WTI crude prices will remain under $60/barrel for the remainder of the year and have a long ways to go before stars align to pop the price out of its current trend.

In local news, Chicago refinery markets are out of refinery maintenance mode and flush with product.  Retail prices on gasoline and diesel continue to soften.  I expect to see prices at the pump continue a slow downward trend.

Propane prices have leveled off for now as demand is starting to kick in.  I think you will see propane prices start to move higher next week with continued cold and crop drying demand.

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

Best regards,

Jon Crawford – Pres.

Crude Trying To Find A Floor

Good afternoon,

Crude oil prices dropped dramatically this week as Chinese/US talks looked to stall.  In addition, the impeachment proceedings and the looming talks around a recession continued to put downward pressure on crude prices.  However, by the end of the week there was a missile attack on an Iranian crude ship, OPEC announced that they will probably cut more crude in 2020, and Trump said that China trade talks are moving along just fine.  Crude prices found some great support to end the week and ended up about where we started the week.  WTI crude continues to stay under $55/barrel which is very low.  The EIA revised their forecast for WTI prices next year to remain around the same price as today for another year.  If so, cheap energy can continue to try and keep the economy afloat.

In local retail news, gasoline prices continue to remain under $2.49/gallon and diesel prices are capped under $2.90/gallon.  Harvest is slowly starting and talks of tight diesel supply are starting to bubble up.  If so, I could see a price spike in diesel depending on the demand during harvest. As of now, with how wet everything is, we expect harvest to be long and slow.

Propane prices found support as an early cold and wet October is showing greater heating demand as well as high demand for crop drying.  Board prices have increased and I expect to see maybe another increase next week.  It is still not too late to lock in your heating price for this season!

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

Best regards,

Jon Crawford

Crude In Bear Territory

Good morning,

Crude oil prices continue to inch back into bear market territory.  At the current rate, WTI crude is poised to fall through $50/barrel.  This is only three weeks after an attack on the world’s largest oil refinery!  Saudi Arabia claims to be back in full production and the rest of OPEC and Russia are concerned about the possibility of surplus crude entering the market in 2020.  In addition, the issues with the US/China trade war are feeding into concerns on world oil demand.  The rest of the world is taking pause and watching.  Overall, crude demand in the US is very strong, so it’s a bit of a market play than fact.  But time will tell.  If a trade deal is completed, hold on to your seats because crude prices will bounce higher!  For now, crude prices are in check as many money managers have exited long positions on crude going into Q4.

In local retail news, gasoline retail prices continue to remain under $2.49/gallon and diesel prices remain under $2.89/gallon.  I believe gasoline prices will continue to hold, but diesel supply in Central Wisconsin is very tight and I expect to see diesel prices go higher in October.  Once harvest kicks in, we could see a spike on diesel prices at the pump.

Propane prices are holding pattern with crude.  Until propane experiences a demand event, there is just not a lot of movement.  I know some people are concerned that their contract price is higher than the board price today.  Remember that a contract provides you with upside price protection.  We are very early in the season and have a long way to go before a heating cost average will carve out.

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

Best regards,

Jon Crawford