The big news at the end of the week was the OPEC decision to put an additional 1M barrels of oil back on the market. The decision is very vague and many countries will not be able to increase their quotas due to constraints. Therefore, Saudi Arabia and Russia will be able to probably increase greater than announced. Some believe the total volume will only amount to about 700k barrels which underwhelmed the market. The markets reacted very strangely. WTI Crude Oil soared over $3/barrel, while BRENT Oil traded about half as much. In addition, BRENT is now starting to sell off which is easing the gap in price between WTI and BRENT. China is working on ways to purchase more oil from Iran once the sanctions take place, and the overall trade war environment is putting the markets in a holding pattern. Basically, the algorithms of the oil market are all over the map, and quite frankly, not much makes sense right now. I think we will have to wait at least a week for more details to emerge before we can start to predict where all this is heading. This week’s market is the perfect example of what happens with computer traded commodities and pre-programmed “sells” and “buys”. Also, the US oil rig count dropped one last week. If our production is starting to peak, I would not be surprised if we see these prices hold for the remainder of the year. Last week our inventory also showed a massive draw in crude oil inventory but the equivalent build in refined products. So basically, we just refined a lot a crude and put products into storage. This was surprising considering we are in high demand season. In other words, strange things are afloat and I’m just going to sit on the sidelines with my popcorn for a bit.
In local retail news, prices of gasoline and diesel are slowly dropping. With the recent move on Friday, I’m not sure how much lower the prices will go, but at least they are not going up. I expect, like with crude, more predictability in a week or so.
Propane prices have remained very stagnant during this crude price upheaval. Right now, our board price is the lowest of the season and we recommend that everyone fill their tanks in the next two months. Also, we have released propane heating contracts for next season! Please call the office now for summer fill pricing and fill out your contract for next season!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Jon Crawford – Pres.