Good morning!
WTI crude prices are now lower than were before the attacks in Saudi Arabia. Saudi Arabia is claiming to be back to 75% production and will be at full capacity within a month. Saudi Arabia struck deals with other countries to cover all their customer contracts during this time. In addition, with impeachment proceedings looming for Trump, the demands side of crude economics was pulled back to front and center. Coupled with political news, Chinese trade talks stalled and the market rally took pause along with an easing in crude prices. This week, the US petroleum inventory report showed a surprise build in inventories with low production runs. Basically, an attack on the world’s largest oil refinery is still not enough of an event to shake the supply/demand dynamic in the crude market. Demand is very unstable and production is at record highs.
In local retail news, gasoline prices have calmed down from the jump two weeks prior, but diesel prices will continue to remain high moving forward. There was a discount on diesel coming out of the Chicago spot market for the past month, placing our cost in Wisconsin about 20-30 cents cheaper than our neighbors to the east. The glut of diesel has dried up, and prices skyrocketed. I expect to see diesel retail prices hold where they are at for some time, especially with high harvest demand on the horizon.
Propane prices are slowly inching up. Although retail spot prices are cheaper than contract, winter fundamentals and potential massive corn drying demand will hit the markets next month. I am predicting propane prices will jump in October. How much higher, will depend on crude prices. For now, you can still contract propane for the heating season. Feel free to discuss your options with us!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford