Good morning,
I hope this message finds you all well. I do not have much to report this week on crude oil. The news has been fairly quiet. The only news was that refined product inventories experienced a major draw this week. If the US crude production starts to return sooner than expected, Saudi Arabia is being very serious about punishing the markets. Also, the economy seems to be running out of steam based on durable good purchases and unemployment filings. WTI is holding around $40/barrel, but I am still bearish on crude oil going into the fall. I just don’t see demand picking up coming out of summer as more people go indoors. For now, it’s the same-old-same-old. We will be watching the election and anything coming out of OPEC to see if pricing will be pushed out of its current trading range.
In local news, differentials on Chicago spot pricing continue to be very volatile. Gas and diesel prices have been very jumpy as cash markets look to cover refiners that are short going into maintenance season. I expect to see gas and diesel prices remain near or above $2/gallon for the foreseeable future.
Propane looks to be in good supply going into the winter. The 2021 weather forecast from a group that I enjoy following was released today. Every single model is calling for a warmer than normal winter. However, looking at historical winters, when every model predicts the same weather event, the opposite usual occurs. In recent memory, the coldest winter in 10 years was actually predicted by every model to be above average, and the exact opposite happened! The models are showing a risk of Polar Vortex movement into Wisconsin. We are also looking at frost next week which is the earliest frost in over 10 years. Basically, it’s too early to call, but if a few things move around I think we will have a jumpy winter with some periods of deep cold. If it stays as predicted, our coldest month looks to be December with tons of moisture in February and March. I will continue to keep you updated as we go into winter. If you you have not contracted your propane or filled your tank at lower prices, it’s still not to late!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford