Prices of crude oil continued their path higher this week settling at the highest close in the last three months. We expect to see crude prices continue to climb as Saudi Arabia is cutting more than expected in volume, supply disruptions continue around the world, and sanctions on oil exports from Venezuela and Iran are hitting the marketplace. In addition, China and US are entering a trade negotiation deadline that is starting to look hopeful. Demand around the world appears to be healthy and OPEC seems set on keeping prices higher. The economy does not seem to be slowing as much as expected in the US and China and overall sentiment seems to be bullish on crude prices. I am seeing healthy prices through Q2 2019, but am on the fence from there. Supply is very delicate and could easily slip into surplus at any moment. But for now, emotions and sentiment are going to push crude along on its current path.
Retail prices for gasoline and diesel continue to be all over the map. Many areas in the state are selling retail gasoline below cost. The next couple of weeks will be interesting to watch as the marketplace continues to digest higher gasoline costs and reluctance to increase retail prices on the street. Diesel cost is continuing to rise as well and $3.00/gallon street price is not far away.
Propane prices are also starting to rise with crude. Although propane inventories are healthy and production is at record levels, cost continues to follow the crude market. I just don’t see propane breaking from crude at this point in the year with a couple of winter months remaining.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.