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