Happy Friday! Although unemployment claims rose last week and Congress failed to pass a COVID stimulus bill, crude oil prices climbed to the highest level since March 2020. Brent crude broke over $50/barrel and WTI held above $45/barrel. The driver of crude prices seems to be surrounding vaccine distribution, a weakening dollar, and unrest in the Middle East. There was an attack on a small oil field in Iraq which is cause for concern as Israel has been trying to broker more peace deals in the area. For now, the optimism of 2021 and the end of the pandemic is outweighing the immediate bearish signals for crude prices. I have no idea what to expect going into the end of the year. A part of me feels that as long as the vaccine news remains positive and the distribution continues, crude prices will hold near current levels and possibly move higher in 2021.
In local news, Chicago spot markets experienced a significant move higher on both gasoline and diesel. I have not been able to discover the culprit, but I’m thinking there is a refinery maintenance issue that popped up somewhere in the Chicagoland refinery market. I would not be surprised to see gasoline prices hit $2/gal going into Christmas. However, as quickly as the increase came, it can drop just as much tomorrow. Stay tuned.
Propane prices continue to hold steady even though the weather is an absolute scorcher of a December and January looks to be an inferno. Exports of propane continue to be at record levels. In fact, exports are so high right now that if the propane industry experienced a colder than normal temperature drop, we would see a record depletion of inventory. One can only be hopeful that if winter ever returns in the next year or so that the pricing for exports becomes less attractive. I do worry about our level of exports coupled with localized heating demand. I have no concerns for this winter, but I will be watching close on the developments in 2021.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.