Crude prices rallied this due to draws in US inventory levels and OPEC commitments to cuts. In addition, the US put new pressures on Russian oil companies after discovering that Russia was helping Venezuela escape US sanctions. Also, a refinery fire in the Gulf caused Chicago spot markets to rally due to increased need for supply. Crude prices and spot markets were set for a good weekly gain until this morning. Today the coronavirus took the major headlines as the virus continues to spread and might not be as contained as the WHO concluded earlier in the week. Crude prices tanked to start the day Friday bringing spot cash prices for refined fuel down with it. So for now, the coronavirus is the new “hot headline”. Whatever announcement hits the news each day seems to drive the market. Volatility is back on big time in the crude trade. Many hedge fund managers exited crude positions over the past few weeks and not many are reentering with these conditions.
Spot prices in Chicago jumped this week and I expect to see prices at the pump increase for gasoline. Diesel prices were not affected as much.
Propane prices found some support with cold weather and high exports. Also, there are discussions around the petrochem companies along the Gulf Coast buying into propane at these lower prices. If the petrochems buy in, we could see the massive glut of propane decrease quickly. For now, lower prices will continue but I don’t expect to see the bottom fall out.
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