Good morning!
Happy Friday! Unfortunately, I don’t have much new news to report. WTI prices, as predicted, are holding at the $40/barrel level. I believe this in part to the upcoming election. When looking at the supply and demand fundamentals, the appetite for refined products in the US is starting to drop, but demand is increasing in other parts of the world where the coronavirus is not as front and center. So there seems to be a balancing act in the current state of economics. I believe that we will trade in a very narrow range through the rest of the year until the big OPEC+ meeting in January. The results of the election and the state of the coronavirus in America will all weigh on the OPEC+ decision. We will see if the election results give any bump in oil prices, especially if it’s a contested election. Other than the upcoming election, I still believe we are in a holding pattern.
In local news, gasoline retail prices are starting to drop now that gasoline supplies have returned to normal in the Chicago spot market due to the completion of some refinery turnarounds. Diesel cost remain higher as we move through harvest and the end of year construction push. However, diesel retail pump prices are extremely low right now in comparison to cost. There is great value for diesel customers in our local market at the pump right now based on historical data. I think that if the market continues to hold, diesel retail pump prices will have to jump back up above $2/gallon. There is now a disconnect again between the cost of gasoline and the cost of diesel coming out of Chicago.
Propane prices are the continued head scratcher. Propane prices are higher than anticipated even though inventories are robust and corn drying demand is low. I believe most supply hubs are keeping prices higher with the unknown winter ahead, but I still feel that propane prices are 5-10 cents heavy. We feel like if inventories are tight and corn drying demand is high, prices go up. And if inventories are ample and corn drying demand is low, prices still go up. Seems like no matter what, suppliers win in times of harvest. 🙂 If crude oil prices hold at the current level, I do think that there is a potential like last year for propane prices to drop in January and February of 2021.
As always, if you have any question, comments, or concerns, please feel free to give us a call. Thanks and have a great weekend!
Best regards,
Jon Crawford