Continuing To Hold Steady

Good afternoon,

This week was another wild ride in the energy markets.  We started the week with a nice selloff due to profit taking and the US Government shutdown looming.  However, prices soared back with a bullish national inventory report.  I really thought the FED announcement yesterday of possible rate increases next year would pop the dollar and cool off WTI crude prices, but it did not.  Instead, oil producers are starting to say that these higher prices are “green premiums” due to possible demand erosion from alternative energy investments.  Lots of posturing, confusion, and caution in the marketplace.  We are definitely starting to see market conditions behave in the opposite historic and sometimes correct action.  When the wobble and opposition to factual supply and demand economics enter a market, look out!  It’s anyone’s guess going into October!

In local retail news, gasoline prices finally saw some summer premium pricing come off as higher RVP winter gasoline is entering the market.  Retail prices on gasoline have been falling and broke away from diesel.  Diesel cost continues to hold steady.  With incredible diesel demand hitting the Midwest with harvest, I do not expect to see much change in diesel prices.

Propane prices continue to hold strong.  We are now officially at the lowest level in national inventory going into winter over the past ten years.  Supplies are extremely tight, production is steady, but exports are very strong.  We can get through winter without too many hiccups as long as corn drying demand is low and the winter is mild.  If either of these two factors throw us a curve ball, hold on to your seatbelts.  Propane could skyrocket higher.  Although prices have gone up and are looking to stay higher, you can still lock in your price for the coming heating season if you have not done so.

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

Best regards,

Jon Crawford

WTI Holding Above $70/Barrel

Good morning,

WTI Crude prices rocketed above $70/barrel this week on news of better than expected retail sales, decreasing jobless claims, and huge draws in crude oil supplies.  The US continues to rebound from the hurricanes down south, but production is looking to return to normal capacity very soon.  Depending on how Covid continues into the winter, crude oil prices are primed to be supported.  Until the US gets into full crude oil production and harvest is completed, prices are probably going to hold higher.  We will wait and see how the Delta variant moves throughout the world this fall and whether the Fed starts to slow down on their bond repurchases.

In local retail news, the cost of gasoline and diesel has gone up.  We expect to see prices at the pump remain near current levels.

Propane prices continue to go higher.  Contract and delivery prices continue to go up as we enter the heating season with record low inventories.  I can only believe at this point that prices will hold and maybe even go higher.  Europe is in terrible shape for propane supplies as well, and China bought extra propane exports fearing a price shock.  So right now we are seeing low propane supplies in Europe and the US going into peak demand season, even though we have record production.  The only way supplies will increase is if the price gets so high at the US export hubs, that Europe and others will be forced to purchase from others.  I would also like to piggy-back and let everyone know that natural gas supplies are in terrible shape as well in both the US and Europe.  Natural gas prices have doubled and they are primed to double again.  The scenario reminds me of 2007 and 2008 when natural gas heating bill could be well over $300/month on an average home.  I believe all heating commodities are going to be extremely high priced until increased supplies or warm weather curb the fears that are real.  It is not too late to lock in your propane price for the season.

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

Best regards,

Jon Crawford

Wait And See

Good morning!

I hope this message finds you well.  Crude prices held just under $70/barrel this week as the world waits to see how Covid-19 and the variants play out going into the fall.  Saudi Arabia announced deep discounts for October signaling weak demand, but then Europe and the US released info showing signs of stabilization in the Delta surge.  In addition, the Fed is signaling a slowing of bond repurchases and many other world banks are slowing bond repurchases.  South Korea even raised interest rates.  In America, 80% of Gulf oil production is still shuddered from Hurricane Ida but slowly coming back online.  But the weekly inventory report still showed strong exports.  And although the job market is looking primed to finally improve, consumer index pricing increased the largest ever at 8.5%!  Basically, a lot of bullish and bearish news for crude price direction.  I think with summer demand winding down but possible economic conditions improving in the US, many traders are going to wait and see.  Also, harvest is starting to kick in so many eyes will be watching crops in the coming weeks.

In local retail news, prices for gasoline and diesel have eased a little bit post Labor Day weekend as expected.  I believe most retail prices will be holding for a bit as well.

Propane prices continue to go up as national inventories are just not building.  The country is going to be short on propane and prices are going to remain high.  If corn drying demand is weak and temperatures stay warm, we could maybe see some price relief.  However, if we have any sort of cold snaps and demand bumps, propane prices could really blow out higher this season, well above $2/gallon.  If you have not done so, you can still contract and lock-in your heating price for the season.

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

Best regards,

Jon Crawford

Happy Labor Day!

Good afternoon!

Instead of a dismal update on prices continuing to go up, let’s just take a break and enjoy the last weekend of summer!  I hope everyone has a safe and fun Labor Day weekend!  We can get back to the world of commodity pricing and the state of affairs next week.  🙂

Thank you again for your business, and if you have any questions, comments, or concerns, please feel free to reach out!

Best regards,

Jon Crawford – Pres