Oil prices sold off earlier this week on surging coronavirus infections across the globe, lack of a US stimulus deal, and fears of demand erosion with an abundance of supply. The sell off was halted on Thursday when the US reported massive draws in crude oil and refined product inventories. The market really seems to want WTI to stay above $40/barrel. Even though fundamentals are quite bearish for crude, there are many qualitative factors affecting crude prices. We have the Presidential election coming up, rising coronavirus infections, world wide reports of vaccines from multiple countries, and overall anxiety about what the future holds. The anxiety of the unknown drives volatility in unexplained ways. I would say that right now emotions are driving much of the markets and until the Presidential election is behind us, it’s going to be a bumpy ride. Markets will still be volatile after the election, but we we will have at least one of the “unknowns” checked off the list.
In local news, retail gasoline prices are holding near $2/gallon and diesel prices on average are above $2/gallon. I do not see much relief in diesel prices until after the fall harvest. So far, the harvest is going smoothly and quickly. I expect harvest to be mostly completed by early to mid-November.
Propane is the biggest headscratcher of all commodities I follow. Prices have climbed dramatically and quickly going into winter index economics. Although propane inventories are at record levels and corn drying demand is the lowest in many years, prices are holding steady. Propane prices feel very, very heavy and unless the cold snap holds for the next month or so, I don’t see propane prices holding at these current levels.
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