Good morning!

I hope everyone had an enjoyable Thanksgiving Day!  Since the markets trade on low volume this week due to the holiday, much of the movements will not be realized until the start of next week.  As of now, the profit taking for the year is starting to take shape due to the emergence of a 10x mutated variant of Sars-Cov-2 compared to the Delta variant.  The world is taking notice.  Although the worst case scenario would be a significant step back, we would not be going back to ground zero.  However, the news was enough for traders to lock in the profits for the year that I’ve been talking about.  Even if the news on the variant comes back as positive in the coming weeks, I don’t expect crude prices to take off.  I think the news today was enough to pull a lot of hedge fund firms out of the crude trade, lock in gains, pay taxes at known rates, and move on.  The one event of the week that is affecting crude prices positively is the announcement of the Strategic Petroleum Reserve.  The SPR has only been used three times in our history to deal with global issues:  Persian Gulf War, Hurricane Katrina, and the civil war in Libya.  The previously mentioned events were a huge shock to the global supply chain.  The situation were are currently experiencing is not a supply shortage.  Producers are choosing to withhold product.  The SPR release announcement caused crude prices to trade HIGHER because of the inaccuracy of the need for the deployment.  The amount of SPR coordinated release changes nothing in the grand picture of global supply.  Either the world increases production or not.  There are not enough global reserves to dramatically tip the scales.  Next week is going to be very interesting to watch!

I do expect to see some relief on pump prices in the coming week.  How much is to be determined by how deep and how long the selloff runs.  

Propane price have lost a little strength over the past week.  Our retail price went down for the first time in six months.  I don’t expect to see prices drop too much as we go into the volatile portion of winter.  We escaped supply disaster due to low corn drying demand, but we are not out of the woods.  Periodic price spikes are continuing to lurk in the background.  In other words, I’m taking the recent downward price movement lightly.

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

Best regards,

Jon Crawford

Happy Friday!

As I have been writing for the past months, the crude oil trade is going to be very choppy until the end of the year.  All components of the trade were in place to keep prices high until the end of the year.  But since there is a massive profit to be gained at these current crude price levels, any strategies to push prices lower could trigger a quick sell to lock in gains for the year.  The foundation of the crude oil trade is based on OPEC+ continuing to withhold crude from the market.  In addition, Saudi Arabia raised their export prices for the end of the year.  I think the act of raising prices further, was a bit too greedy.  This week, Occidental Petroleum, the largest shale oil producer in the US said they would be willing to increase production to help lower prices.  They also said their strategy is to start coming back online fast in 2022.  The actions prompted the International Energy Agency to call a crude surplus in the marketplace starting in Q1 2022.  The announcements set off a selling frenzy as traders tried to lock in record gains in 2021.  OPEC responded by pleading with others that the strategy is working and to hold the course.  But then today, the Biden Administration is looking to work with allies to all release Strategic Petroleum Reserves and flood the market with oil.  The event would cause a crash in price.  And in addition to the US and their allies, China joined the party too, saying that because of rising prices and OPEC’s decision to cease offering discounts on their exports, China would also tap their Strategic Petroleum Reserve.  Crude oil prices are looking to close the week below $80/barrel for the first time in a while.  Could the end of year rally and 2021 crude trade finally be collapsing?  Possibly…. If the US, allies, and China keep their word and flood the market, $70 and below will be the target for WTI moving forward.  The move would be a welcomed inflationary relief going into the holidays.

In local retail news, prices are slowly unwinding from the highs.  However, I do not expect to see diesel prices at the pump drop too much since we are entering into colder weather and the cost of blending diesel with additives and #1 Diesel is entering into the marketplace.

Propane cost is slowly unwinding but with the winter contract cost differentials and lack of demand, I do not see retail prices dropping very quickly.  There will be caution going into the next few months with colder weather on the horizon.  However, the good news is that I do not see propane retail prices going any higher anytime soon.

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

Best regards,

Jon Crawford

Good morning!

Happy Friday!  Colder weather is starting to set in and there was even some snow/mix this morning.  Hard to believe that winter is almost here!  Anyways, crude prices took a wild bumpy ride again this week.  The COP26 concluded this week with not much changed except a wanting to get off of fossil fuels.  However, the conference sparked backlash from Saudi Arabia and others.  The US and other nations have called for the ending of fossil fuel production, yet demanded Saudi Arabia and others in OPEC to pump more oil to bring prices down.  Saudi Arabia responded by saying that since the world wants less fossil fuels, they might pump less fuel and allow the world to experience the pain of high prices.  Saudi Arabia believes the world is not ready for a full transition to alternative energy and they are not going to be bossed around, especially from the US, as we continue to withhold our own oil production from the market.  In addition, Saudi Arabia raised their prices for December and January shipments just to prove a point.  Then, inflationary data for the US came out at the highest in 30 years and the API reported draws in national crude oil inventory.  By Wednesday, crude oil prices were touching on the highest prices for the year.  On Wednesday, the EIA instead showed a build in crude oil inventory and the Biden administration, along with the FED, decided that maybe it’s time to do something about inflation.  The coupled news sent the Dollar much higher and crude prices tanking.  In addition to the bearish sentiments, COVID seems to be coming back for one last major stand in the US and Europe, and China started cutting crude imports due to higher prices.  At one point, WTI dipped below $80/barrel again after being at $85/barrel earlier in the week!  As I’ve been writing, the crude trade is going to be wild going into the end of the year and whether or not traders are going to ring the register on a 70% gain for the year.

In local news, gasoline and diesel prices have remained fairly steady as the market continues to go back and forth every day.  There is not really a directional movement carved out.  I’m expected to see prices remain around the same for the coming week.

Propane prices have continued to stay in check.  As winter approaches and winter price indexes hit the market, I don’t expect too much movement on price for the time being.  We have not moved price at retail for almost a month and I welcome the news considering prices went up over 50 cents/gal since July!  So now we just need to wait and see how hard mother nature hits us this winter.  I am cautiously optimistic going into the winter.  If the FED raises rates sooner and we get a leg-down movement in crude prices, propane prices could stay in check.

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

Best regards,

Jon Crawford

Happy Friday!  Wow! Crude oil prices took a wild roller coaster ride this week.  Prices started the week out soaring back near highs of $85/barrel on WTI.  Then the US announced increases in national inventory coupled with the news that the FED will begin tapering and possibly raise interest rates in early summer of 2022.  The news sent crude oil on a nose dive over two days of trading, closing at $79/barrel on Thursday!  The closing price was the lowest in weeks.  In the middle of all the news, OPEC+ had another meeting and decided to keep oil production steady, regardless of calls from the US to increase production.  I figured the news would have shot prices higher, but it fell on deaf ears…until this morning.  The October jobs report was knocked out of the park based on expectations, so the news coupled with OPEC’s announcement from yesterday shot WTI right back above $80/barrel.  Looks like WTI is still going to close down for the week, but not nearly as much as anticipated.  As I have been writing, we are in uncharted volatile territory with many players holding the crude oil trade.  The next four to six months are going to be very choppy.  Try not to get sick on this roller coaster ride!

In local news, the cost of diesel has finally eased a bit with harvest on the backend.  Gasoline cost has eased a bit but not as much as diesel.  I expect to see retail prices basically unchanged as the markets are still balancing into the supplies being sold at retail.

Propane price has continued to hold steady through this choppy trade, but that is ok.  The wild ride higher seems to be kept in check at these numbers.  As I have been writing, we are not out of the woods, but more on a pause.  I still could see propane having some break out higher sessions depending on the amount of cold weather this winter.

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

Best regards,

Jon Crawford