Good morning,

I woke up this morning and felt it best to take a moment and honor all service persons who gave the ultimate sacrifice of their lives defending our incredibly awesome country. Even though our country can go through hard times at home, we are extremely fortunate and blessed to live in America. I wish everyone safe travels and enjoy remembering that our long weekend came at a significant cost.

Crude oil prices rose to start the week based on Saudi Arabia saying “look out” to short sellers of crude. The next OPEC+ meeting is during the first couple days in June. But then yesterday, Russia said that they are not planning on any more cuts and don’t see a scenario where OPEC+ would approve additional cuts. The announcement caused crude oil prices to collapse. OPEC allowed Russia to play a part in meetings back in 2008, so the difference in opinion could be causing some friction and fissures in OPEC. We will see what happens at the meeting. And then of course there is the US Debt Ceiling talks which is putting all traders on their heels. So for now, we are in a “wait and see” moment. I would not be placing any long-term hedging bets on crude oil at this time.

Gasoline and diesel prices in the Chicago market dropped a bit towards the end of the week. We might see a little relief on retail prices at the pump, but not too much. Although some refineries that were down for over a year have restarted, a very high volume refinery has struggled to get gasoline back online. However, I expect supplies to be healthy and ready to go for the summer season. But retail prices on gasoline will continue to be higher because of the crude oil crack spread incentives to produce diesel.

Propane is bouncing back and forth in a very narrow range. Summer fills are starting to pick up and next season’s heating contracts have been released. So look in the mail for contract information coming your way, or feel free to call our office and get yourself locked in for next year. The great news is that the coming season’s contract pricing is 30 cents/gallon cheaper than last year! 🙂

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

Best regards,

Jon Crawford

Good afternoon!

I hope this message finds you all well. I am writing my weekly update a bit early. WTI crude prices were on a ride higher for four straight days based on the strong dollar and talks of no recession, as well as American oil companies announcing they plan to be disciplined just like OPEC to try keep WTI price above $70/barrel. Oil companies across the globe have made it pretty clear that $70/barrel WTI is the price floor. Although there was a slight sell-off and profit taking today, WTI will still not close below $70/barrel today. Inflation data was “devil in details” like usual, China’s economy slowed less than anticipated, the EIA reported large draws in gasoline and distillates, and the UK is confident they will avoid recession. But, the big news supporting crude oil prices is once again Pres Biden saying he is going to start purchasing crude oil to refill the Strategic Petroleum Reserve. The SPR is currently at the lowest level since 1983. Since making the statement public, support for crude oil prices will remain strong. The sell-off today was a bit of profit taking on the latest run higher and Jamie Dimon from Chase bank saying that the mid-bank failures might not be over yet. So you combine a bit of higher prices with some fear thrown in there and traders with try and bet on the arbitrage. I think we will experience WTI prices climbing back higher tomorrow into the weekend.

In local news, gasoline and diesel cost rose over 30 cents in the past four trading sessions before giving back a bit today. In our local market, we are now into farm season coupled with refinery maintenance. I think we have some supply issues working their way out between the Group and Chicago spot markets. For now, I expect to see diesel prices and gasoline prices remain higher than the low last Monday. Even if crude prices fall, we could experience higher prices in finished product due to refiners running into issues with their maintenance and looking to export barrels instead of keeping wet barrels in local markets. Only time will tell.

Propane has been looking very steady and making small prices moves with the WTI crude oil trade. The good news is that summer fill prices continue to drop. Now is a great time to fill your tank, and I think next week heating contracts for 2023-2024 season will be available! The contract price for next heating season will be much lower than the previous winter season. During a time of inflation, propane is experiencing deflationary pressure due to an abundance of inventory, even though exports are at record levels. In addition, we don’t see production slowing anytime soon. Keep your eyes peeled for the contract mailing or feel free to call us next week. Remember, filling your tank in the summer benefits the supplier by giving the supplier allocation access for the coming winter to guarantee that propane will be efficiently available in the marketplace. We are a bit more flexible with our summer fill volumes to try and help everyone take advantage of cheaper prices.

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

Best regards,

Jon Crawford

Good morning!

Well, the fear of recession, midsize bank failure contagion, and the FED raising interest rates a quarter point hammered crude prices this week.  Even though WTI crude price is finding support on Friday, WTI could report three straight weeks of loses.  I figured that traders would take profits on Friday and buy back in since WTI fell below $70/barrel which is the current “magic price floor”.  Midsize banks are continuing to lose deposits.  The interesting fact this week was that most of the midsize banks losing deposits have a great balance sheet and are not in any sort of financial trouble!  The main issue is that the news is constantly hammering midsize bank failure so their customers are pulling their money out and moving to the big banks, like Chase, Bank of America, Wells Fargo, etc.  Unlike 2008 when the big banks were in trouble for making risky bets, the midsize banks are the vulnerable banks without making many risky bets!  Yes, some midsize banks have bad balance sheets, but this week, healthy midsize banks got hammered due to customer fear and lose of deposits.  In addition, when the FED raised the interest rate another quarter point, the fear of recession only made the problem for midsize banks worse.  The news is constantly reporting that customers need to be in safer larger banks.  Unfortunately, the banking crisis unfolding before us is not as bad as the situation being sold.  The ECB (European Central Bank) also raised interest rates this weeks adding to the fear of global recession.  However, India and China reported healthy economic growth as well as a nice forecast for the year.  The war in Ukraine continues, England is a mess, and the US seems to be dead set on waiting for the FDIC to raise deposit protection to calm the midsize banking failure contagion.  Although recession fears won this week in the marketplace, traders of oil forget that OPEC+, as well as American producers, are being very disciplined with their production.  I would not be surprised if we start to see more significant draws of crude oil inventory in the US, as well as OPEC+ announcing even further cuts at their next meeting in the first part of June.  In fact, if WTI starts to fall towards $65/barrel sooner than later, I could see OPEC+ having and emergency meeting and cutting production before their.  An emergency meeting has been used in the past to stop the falling knife.  For now, I think we are in a falling knife scenario based mostly on fear.  Remember, markets are not the economy. Markets behave irrationally.  Once again, let’s see what next week brings!

In local news, gasoline continues to trade sideways as builds in inventory continue acorss the US, even with decreased production.  Diesel prices have collapsed well below my predicted floor.  I am shocked at how low diesel prices continue to move.  Although there is much profit taking in the market today, I believe we will see cheaper diesel prices until demand for farming and the calming of the almost “meme” banking crisis ends.

Propane prices coninue to fall and I believe we will see the lowest prices towards the end of May.  Production is strong and inventories will start to build quite dramatically over the coming months.  Next season’s heating contracts will be cheaper than this year.  And remember, if you can, please order a summer fill.  Not only will the price be lower than the nest season’s contract, but summer fills help propane companies build allocation rights for the coming winter which ensues reliable supply for the state of Wisconsin.

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

Best regards,

Jon Crawford