Crude oil prices have dropped for five straight days. Yesterday WTI crude dropped 7%. The last time crude prices dropped that much was in September of 2020 and the third wave of COVID was starting in the US. Crude prices are coming under pressure as the FED manages the US monetary policy. Bond markets are heating up and some traders are liquidating long crude positions and buying into bonds. In addition, Europe halted their vaccinations with AstraZeneca and starting lockdowns in various cities. Crude prices have been very frothy and we have been waiting for something to break the cycle. Well, the cycle has been broken and now many traders are frantically trying to “talk up” crude to cover short positions. The correction might be a good buying opportunity for future positions, but I don’t know if the correction is over yet.
In a surprise move, gasoline and diesel retail prices might ease a bit in the coming week due to the drop in cost. Although margins were slim at these higher prices, I believe you might see some cheaper prices at the pump next week.
Propane prices are continuing to slowly unwind from the back-t0-back short squeezes on the market and the effects from the Texas Deep Freeze. I do not expect to see propane summer fills below $1/gallon, but we could get close. For now, if you still have contract gallons remaining on your account, I recommend using them up and waiting to see if prices are down towards the end of August. Inventories of propane are still 15% below the five year average so we won’t know until at least August if we are out of the woods on supply issues going into next season.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.