Good afternoon,
I hope everyone had a chance to enjoy some beautiful weather the past week. In crude oil news, WTI crude oil has officially closed above $66/barrel and now surpassed a technical resistance price point. The push over the edge came on the heels of Trump’s announcement that oil waivers would no longer be issued to countries purchasing crude oil from Iran. Traders viewed the announcement as bullish support for supply tightness coupled with the instability in Libya. However, Saudi Arabia and UAE said that would be able to easily put another 1M barrels/day into the market. That announcement capped any significant gains in crude prices. Since the announcements on Iran, economic data from South Korea was terrible; the worst posting since the great recession. US Jobless claims rose, and the Fed is starting to think about staying firm on rate increases. Oil is struggling to hold these current price levels, but the bulls have a pretty strong platform built around $60/barrel WTI. As I have been saying, I expect prices to stay high for a while longer. But I think June is going to be very interesting. Russia is not happy with the deal that the US cut with Saudi Arabia and UAE. I think Russia might pull out of the OPEC deal in June and start pumping more crude. In addition, the US continues to keep crude production levels high. And the last piece of caution news to look at is a rumor floating that Trump is considering giving China a waiver for Iranian crude as part of a trade deal. He really wants to ink a trade deal quickly to cool the heat that has been burning in DC. I guess we’ll see if anything comes out in the next few days.
In local retail news, gasoline prices East of Rockies started to sell off except for Chicago. Chicago is having continued supply problems at refineries and is about 10 cents/gallon inflated compared to neighboring markets. So unfortunately our current retail price will hold for some time yet. Diesel retail prices are holding steady and I expect the current prices to remain, especially going into the start of planting season for the farmers.
Propane prices are continuing their trend of detaching from crude prices. Retail prices are slowly dropping into summer. I expect to see next season’s heating retail prices be at about the same price as last year, even though crude prices are 20% higher! That’s some good value! For now, make sure you consider getting a summer fill and watch out for contract info that should be mailed out around the 4th of July.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford