Memorial Day Weekend Announcement

Good morning,

Instead of a market update on the chaos of trading and the coronavirus, I’d like to take a step back and zoom out.  I want to take this moment on behalf of everyone at Crawford Oil and Propane to remember and honor all men and women in our Military who gave the ultimate sacrifice of their lives defending our Country.  Have a safe and reflecting Memorial Day weekend.  I will touch base next week with a market update.

As always, if you have any questions, comments, or concerns, please feel free to reach out.

Best regards,

Jon Crawford

Crude Finding Support, Prices Rising

Good morning,

Not too much to report this week.  WTI crude prices have risen this week to nearly $30/barrel.  There is much optimism on the continued cuts from OPEC and the US.  In addition to the cuts, China’s crude demand is ticking back up as the country is reopening.  The traders are also hopeful that US demand will continue to rebound from the lows in March and April as states begin to reopen.  The FED is also calling for more stimulus which always raises commodity prices.  I feel that the current WTI price recovery is too fast.  Although there are some bullish headlines out there, the supply balance in the US is still on the bearish side.  I’m not hopeful that WTI will break out much beyond $30/barrel.  If for some reason WTI does break much above $30/barrel, we will see rig counts increase and another price collapse.  I still think we are six to twelve months away from complete supply re-balance in the marketplace.

In local retail news, prices of gasoline and diesel continue to rise.  I do not expect to see pump prices go down anytime soon.  I would count on gas prices above $1.50/gallon throughout the summer at this point in time.

Propane prices also continue to rise.  The supply economics of propane continue to be bullish.  By no means is the propane supply situation looking like an emergency, but the world of overabundance in supply are behind us.  I highly recommend filling your tank and contracting for next season when the contracts become available.

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

Best regards,

Jon Crawford

Crude Rally – Pump Prices Rise

Good morning,

WTI prices gained more than 40% on hopes of the world economies reopening and demand potentially soaring back with a vengeance.  WTI settled this week near $24/barrel.  In addition, the builds in US inventories were not as large as expected.  Production seems to finally be dropping.  However, in my opinion, the rally back seems to be a bit over-bought.  Inventory levels are still high and the world supply is still robust.  Unless there are more stories of magical cures hitting the market this month, there is a potential for another massive sell-off on the WTI contract this month.  Saudi Arabia did cut a bunch of tanker shipments, but at the same time, there are not many tankers left to fill!  So for now, WTI will probably hang around these levels and move in volatile swings until the end of the month.

In local retail news, gasoline retail prices continue to rise.  The glut of supply in Chicago is gone.  Gasoline and diesel costs have risen over 50 cents/gallon these past weeks.  I expect average retail prices of $1.69/gallon gasoline and $1.79/gallon diesel fuel to continue into next week.

Propane prices continue to rise as I have been writing the past weeks.  Propane seems to have bottomed in mid-March and not looked back.  We are suggesting that everyone fill their tanks now if possible.  Production cuts are adding to the supply worries in propane.  Contracts for next season will be coming out probably in June sometime.  Stay tuned.

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

Best regards,

Jon Crawford

Temporary Floor – Chicago Glut Gone For Now

Good morning,

I hope this message finds everyone safe and well.  Crude oil prices are hopefully carving out some support to keep from falling into single digits or negative territory.  Oil companies are beginning to finally cut production here in the US.  In addition, oil companies are starting to do what I feared: cutting dividends.  Shell announced a slashing of their dividend for the first time since WWII!  The inventory report this week showed that maybe we have peaked in production and finally slowing down on building of inventory.  The FED continues to put out offers for helping the economy which also help support oil prices.  We are also seeing a slight, and I do mean slight demand pick up on gasoline which shows that people are slowly starting to move around.  But I am not confident that oil prices will go much higher.  We are not out of the woods by any means.  So many oil companies burned through cash and restructured debt from 2018 hoping for the payoff in 2020.  Well, that’s not going to happen.  I imagine that bankruptcies and depressed oil stocks will continue through summer.

In our local market, gasoline cost has risen over 45 cents/gallon since the beginning of April.  Do not believe what you read in the papers.  Gasoline prices will not be staying under $1/gallon.  The glut of gasoline supply in Chicago is now gone and market economics have balanced accordingly.  The retail cost of gasoline is well above $1/gallon.  I expect to see gasoline prices rise to almost $1.49/gallon in the coming week.  Diesel cost has also risen by almost 30 cents/gallon.  I expect to see diesel retail prices move up a bit in the coming weeks as well.

Propane continues to be a wild card.  Exports diminished for the first time in weeks which helps building local supply, but as price of crude rises, propane price will also start to rise.  There are a lot of chicken and the egg scenarios in propane.  Right now inventory levels are not great, but they are not terrible.  The main concern is Canadian rail propane.  In years past, the US has been well supplied by Canadian propane.  That does not look to be the case in the coming year.  Therefore, we will be heavily dependent on the ability of the US cavern storage to meet consumer demand in 2020/21.  I believe that the price on propane today has the potential to be the lowest price of the year.  I am recommending that people fill up now if they can.  Contract pricing will be coming out soon.  I know for certain that next season’s price will be lower than this season.

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

Best regards,

Jon Crawford