Good morning,
Happy Friday! WTI crude oil prices went ripping higher even though the FED raised interest rates to the highest in over 20 years. Inflation is finally starting to cool but demand seems to be strong and producers continue to be vigilant in limiting supplies. WTI crude prices are almost touching $80/barrel which has not been seen since last year. Unfortunately, unless a “harder landing” or recession starts to build contagion across the globe, I believe these higher oil prices are here to stay. As I have been writing, OPEC+, including American producers, are just not going to let WTI crude prices drop below $70/barrel for extended periods of time. Since crude oil prices have risen hard in the past week, the cost of all products connected to crude oil have risen as well. We have not seen prices drop one day the entire week. I guess we’ll see if there is any cooling or profit taking on crude prices next week.
The Chicago market has rocketed higher and given back all of the low spot basis of the past few weeks. Diesel prices have gone up 70 cents/gallon and gasoline continues it’s slow grind higher. Unfortunately, diesel supplies are going to be tight when harvest starts. Two of the main refiners in our market are going down for maintenance. So if there is a rush on harvest, prices of diesel could rocket even higher on tight supplies. For now, the days of cheap diesel are behind us. In addition, if Saudi Arabia continues to limit diesel shipments to the East Coast, Chicago refiners will move barrels east.
Propane spot prices have actually gone up 10 cents in cost the past week and a half. Propane future pricing continues to be weak. Given so many unknowns in the marketplace, we highly recommend everyone topping their tanks off by the end of August and contracting for next year. Even though propane inventories are in great shape, logistics of moving propane around the country continue to be difficult and could cause issues resulting in higher prices.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford