Wild Roller Coaster Ride!

Posted on July 23, 2021July 23, 2021 by Jon Crawford

Good morning!

Crude prices are ending the week higher than where they started. The week was the most volatile we have experienced in over six months. Monday started with over a $5/barrel correction in crude price due to OPEC announcing an end to production cuts starting April 2022. Many companies took profits on the news, rang the register, and waited to see happened next. Crude prices are up almost 60% for the year, so it’s not a bad return on some positions for traders. However, the market called a bluff and basically clawed back all the losses by the end of week. Even though COVID is causing issues in many parts of the world and the US inventory report was very bearish, crude prices continued to climb. Although the price did not fully recover from Monday’s bloodbath, WTI crude still settled back above $70/barrel. I’m not sure we will see $100/barrel crude oil, but for now, crude prices seem supported at current levels.

Gasoline and diesel retail prices will probably remain pretty steady at the current rate. Although cost dropped dramatically on Monday, the cost increased back to the starting point by the end of the week. So unfortunately, there looks to be no change in site for prices at the pump.

Propane price is continuing to remain very bullish and well supported. Inventories are over 25% lower than last year and we are now at the lowest inventory level in nine years. Even though crude prices eased a bit, propane price did not give up much ground and quickly recovered. I do not see much relief for propane prices on the horizon. We will have to wait until after harvest before we really get a better feel on the winter supply situation. However, Canada continues to have ample inventories so our rail terminals will be able to hopefully provide a much anticipated supply relief this winter. Our contracts for the upcoming season are out. Please feel free to call the office to sign up today!

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

Best regards,

Jon Crawford

COVID and OPEC+

Posted on July 16, 2021July 16, 2021 by Jon Crawford

Good morning,

Happy Friday. I hope this message finds you well. OPEC+ and UAE finally reached a supply agreement to allow UAE to increase their base crude level supply numbers starting in April of 2022. So at this point, OPEC+ looks united to continue increase output from now through 2022. Crude prices softened a bit on the news but were kept supported by another larger than expected draw in US crude oil inventories. As jet fuel demand and gasoline demand continue to skyrocket, diesel demand is lagging. Although demand for crude in the US seems to be strong, around the world the delta variant from COVID is slowing down many countries from full economic recovery. Even in the US, the delta variant is adding a new variable as cases are up in every state. The markets are a bit spooked of an economic slowdown going into the Fall, so crude prices look to close this week lower than last week. For now, all eyes will be on the delta variant in the US to see if we peak in August before school starts.

In local news, gasoline and diesel retail prices have taken a breather. With crude prices easing a little, I expect current pricing on the street to hold for a little while.

Propane prices continues to hold tight as inventory levels are lackluster for this time of year. Currently our supply in the US is at the lowest level in over eight years. Until corn drying and next winter weather predictions start to roll in, I don’t see propane prices going down anytime soon. Our contract prices for next year have been released. Please call our office for contract pricing and current summer fill rates. We also highly recommend everyone getting a summer fill at this time.

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

Best regards,

Jon Crawford

Crude Oil Prices On A Pogo Stick

Posted on July 9, 2021July 9, 2021 by Jon Crawford

Good morning!

Crude prices took a ride on a pogo stick and are looking to end the week just slightly lower than where they started. The week started with a failed deal at OPEC+ on agreement over increased production runs. UAE decided that the deal does not work for them since the baseline quotas look back to 2018 and do not take into account the investments made over the past couple of years. The markets reacted very strongly signaling WTI crude prices could roar past $80/barrel. However, by the end of the day, the markets realized that maybe a non-agreement would cause all members to cheat and open the export valves. I have been writing that eventually someone in OPEC+ is going to cheat and start exporting more than what they agreed upon. As the week closes, a deal has still not been met. During the week, crude prices fell on the news that the delta variant is starting to shut down places across the globe that have low vaccination rates. Tokyo declared a state of emergency and banned spectators from the Olympics. Sydney is imposing new measures, and South America is still out of control with COVID spread. In addition, back at home the delta variant is starting to rapidly spread in states that have low vaccination rates. The world news on OPEC+ and COVID, started a sell-off, but was quickly brought to a floor on a whopping 8M barrel draw in crude inventory here in the US! Couple the inventory draw with good economic data and a weaker dollar, and crude prices bounced back to just under where they started the week. The volatility experienced this week will continue throughout summer and possibly until the end of the year due to COVID and OPEC+. So I hope you like pogo sticks because we are going to be riding on one for quite some time.

In local news, gasoline retail prices have peaked for the moment under $3/gallon in our market and diesel retail prices have held near $3/gallon. As long as crude continues to bounce in the current range, we should continue to see retail prices hold near current levels.

Propane prices continue to go up, up, up. We are on pace for the lowest inventory building season in almost ten years! We prefer to have 100M barrels of propane in US inventory by the end of September and right now, at the current pace, we are looking more like 78M! Going into winter with potentially 20% below need is keep propane prices high. So unfortunately, until we see our inventory builds gain pace closer to hitting 100M by end of September, I just don’t see much relief in propane prices. Even with a massive drop in crude oil prices, I don’t that scenario equating to a reciprocal drop in propane price. We have our contract prices out for this coming season. Please feel free to call our office for more information.

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

Best regards,

Jon Crawford

Happy 4th of July!

Posted on July 2, 2021July 2, 2021 by Jon Crawford

Good morning!

I wanted to take a break from the updates of higher prices and all the chaos around commodities and wish everyone a safe and happy 4th of July celebration! We have plenty of time after the long weekend to go back to worrying about prices of gasoline and propane. 🙂 So let’s take a few days and enjoy some fun and laughter with friends and family. I will catch everyone up on OPEC+ and propane outlook next week. Thank you again for your business and have a great extended weekend!

Best regards,

Jon Crawford