Good morning,
I hope this message finds everyone well. This week has been very interesting for the crude markets. We experienced a good price jump higher on Tuesday based on news of the strict sanctions Trump is looking to enforce on Iranian crude exports. In addition, the API Inventory report showed a large crude draw and flat levels for gasoline and distillate. But then on Wednesday, China announced tariffs on US Crude Oil imports and the EIA reported a much smaller draw in crude supplies coupled with a massive build in gasoline and distillate inventories. The China news and EIA report, along with the announcement that other countries were not going to play along with Iranian sanctions, caused a 3.2% drop in crude prices, pushing WTI through the support price of $67/barrel. So for now, we are looking at the $67-70/barrel range for WTI prices. Crude prices are basically controlled by headlines at the moment, so it’s a very volatile and unpredictable trade at the moment.
Retail prices on gasoline and diesel have eased a bit since last week. I expect prices to hold throughout the weekend. Right now summer demand for gasoline in Wisconsin is down compared to last year. I believe that the intense amount of road construction along with higher prices have dampened travel plans this summer.
Propane prices have started to rise. Inventory levels across the country are sitting around the same level as last year. Analysts are worried that intense cold will put pressure on supply. Unless we make up some ground in inventory levels across the country, the potential for a price break out on propane this winter is very high. But I want everyone to know that Wisconsin is in great shape for supply crunches. There have been five new rail terminals along three different railways added in the last two years, including upgrades to current facilities and retail storage capacities. If you have not filled your tank this summer, please do so. And if you have not locked in your prices for the winter, I highly recommend that you contract your gallons by the end of August to ensure a good price.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford – Pres.