Well, another wild ride for crude prices this week. At first to start the week we were expecting to see some bumps higher in prices as a potential for double hurricanes in the Gulf were brewing and the US and China renewed Phase 1 trade talks. As prices rose on Monday, many expected to see crude prices rally through the week. On Wednesday, draw downs in inventory and continued coronavirus fears supported the pricing complex. However, our local Chicago spot market also changed their cycle timing to October which caused a large drop in basis. So as crude prices were holding steady, our local market was experiencing some cash price erosion off of the highs on Monday. And then the FED topped the week off with their aggressive change in tone on rates and perception of the economy. The FED is now going to work a policy that spurs inflation, job growth, and keeping rates lower for longer. The announcement caused a shift of selling in crude and a buying into equities. Although at the end of the week, crude prices have remained somewhat supportive, the local cash markets have broken away from the trend due to an abundance of supply in the Midwest.
In local news, I expect to see gasoline retail prices continue to hover just under $2/gallon. Diesel retail prices are still very attractive if your market is under $2/gallon. The diesel retail margins are very tight. However, diesel products are very plentiful in the Midwest and depending how harvest goes in the coming months, a potential for some nice drops in diesel retail pricing is possible.
Propane prices are stable but are transitioning to winter economics soon. I expect to see propane retail prices rise a bit in September. If you have not ordered a summer fill yet, please do so before prices start to change. I also recommend locking in your price for the upcoming heating season. The price is lower than last year and with COVID-19, world trade relations, a presidential election, and a crazy summer of weather, I have no idea what to expect this coming winter.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.