Market Bloodbath

Good morning,

The spread of the coronavirus has taken all markets by storm and entered into correction territory.  No matter what any true market conditions are appearing, the markets have sold off at the highest capacity in one week since 2008.  Crude prices are down to over four year lows.  The massive sell off is creating potential future buying opportunities, but no one knows how long this could last.  For right now, it’s sit back and watch the falling knife.  However, I would like to point out, that in my opinion, there are some signs of supply tightness in the diesel market and no matter how low crude prices go, diesel might be starting to form a bottom.  Little early to call, but it’s something I am watching.

Local retail prices are not able to fall fast enough.  I expect retailers will slowly lower prices to make up for losses on the last run higher.  At the rate we are going, gas prices below $2/gallon are not out of the question in the coming week or so.  Diesel prices will also continue to come down.  At this point, we are at the potential for the lowest cost on diesel for planting season in many years.

Propane prices have not followed along with crude in the bloodbath sell off.  Propane prices are bouncing along a bottom sweet spot.  If they go any lower, the petro-chem companies will buy up everything in inventory, and I mean everything.  So traders are not throwing in the towel just yet.  However, I can safely predict that I believe next year’s heating contracts will be lower than the current year without some massive change to inventory.  As we go into the end of our current winter, we are looking to complete the second warmest winter in 10 years.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Best regards,

Jon Crawford

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