I hope this message finds you all safe and warm. Dangerously cold weather will be entering our area all of next week. We have taken precautions to prepare and we are ready to serve our customers through what will probably be the toughest week of the winter. If you are a call-in customer for propane or fuel oil, please make sure to check your tank. Usage will be dramatically increased next week and with the negative temperatures over night, running out of fuel can cause a house to get cold quickly. In addition, please make sure to have your driveways clear and salted if necessary. Our drivers are very busy and want to make sure they can safely and efficiently deliver to as many customers as possible. We appreciate your help!
In the news, WTI Crude prices have broken through $55/barrel and are approaching closer to $60/barrel. As I have been writing, there is much more upside risk to crude prices than downside. OPEC+ is holding firm on production cuts. Production in the US has been slowly increasing, but not much. The economy is looking to be holding and gearing up for a recovery with strong fuel demand. And the Senate just passed Biden’s COVID Relief Package which gives further support to jumpstart the economy but also potentially at the expense of devaluing the dollar. Any devaluation to the dollar raises crude prices, as crude prices are traded against the dollar. Therefore, the relief package is a potential double-whammy to crude prices: increased demand and devaluation of the dollar. As I have been writing, I believe the days of retail gasoline under $2/gallon are behind us.
In local retail news, gasoline retail prices are averaging near $2.29/gal and diesel retail prices are averaging near $2.59/gal. I do not expect to see any price relief at the pumps in the coming week.
Propane prices are under a lot of pressure. Exports continue to remain strong and with the recent cold snap in the Midwest and Northeast, Conway “wet” barrels are getting harder and harder to procure. The spreads between Conway and Mt Belvieu are widening again to try and keep propane in Conway as opposed to going south and out the door in exports. But with the recent surge in demand throughout the Midwest and Northeast, I do believe that propane prices will remain high until winter crosses the finish line. The only possibility for price relief is to see temperatures in the Midwest and the Northeast go to above normal at the end of February or beginning of March. If not, I feel that current retail prices are here to stay and possibly get higher.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.