Well, winter snuck up on us pretty fast to start November! Single digit temps and lots of snow the past week have made November feel like January! Corn drying demand and the colder than normal temperatures have put a lot of pressure on propane distribution. There is not a shortage of propane, but there is only so much propane that can move through distribution at one time. Hopefully by the end of November harvest will be almost completed and temperatures will be back up to normal. But for right now, we are calling for colder than normal through the end of November.
Crude prices spiked on the hopes of a China trade deal. Although crude prices are still very low, we don’t expect to see much more upward movement. I am not convinced that demand is going to outstrip supply in the coming six months.
Retail prices on gasoline have dipped a bit. But I would not expect to see prices drop much more. Diesel prices have risen since winter additive blending and #1 oil have entered the supply picture due to the extreme cold. Winter additive blending and #1 oil can add up to 20 cents/gallon to the cost of diesel fuel. I would expect to see diesel prices remain higher now that winter temps are here.
Propane prices have risen due to the massive demand spike in the Midwest. I do not expect to see prices relax from their current levels anytime soon. If you are a will-call customer, please make sure to check your tank! This cold snap has caught many customers off guard. Also, please make sure to salt or sand your driveway to ensure a safe and efficient delivery, and that there is a clear path to your tank.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
I hope everyone had a great Halloween even though it was cold and snowy out. Sounds like the cold weather is going to stick around for awhile. If all weather patterns hold, we are in store for a colder winter with a lot of snow. I will keep you updated based on the prediction services we subscribe to.
Also, I wanted to clarify that there is no propane emergency in Wisconsin. Gov Evers issued an extension of service hours exemption this week and made reference to a propane emergency. This is not true. We are having a high demand cycle with corn drying and the early cold weather, but there is no emergency. Basically, trucks are waiting extra long hours to load product, so we want to make sure that drivers have enough hours on their books to deliver the product. Once corn drying is over, distribution will be back to normal. But there is no emergency, shortage of product for this winter, massive price spikes on the way, or anything to be too concerned about at this time. I will keep you posted as the month goes along.
Crude prices continue to trade narrow range. We are still predicting that WTI crude oil will trade around $55/barrel through the end of the year. Nothing new on this front.
In local retail news, refinery maintenance has been longer than expected and supplies are starting to get a bit tight. I would expect to see prices at the pump on gasoline and diesel rise next week.
Propane prices are rising due to increased demand, but nothing out of the ordinary. If you are on a will-call, please remember to check your tank. The early cold and snow has caught some customers by surprise! 🙂
If you have any questions, comments, or concerns, please feel free to give us a call.