Crude prices continued their push higher towards many bankers’ hopes of $70/barrel. Throughout the week, continued news stories push the narrative of higher prices. We closed the week with WTI at $69.62/barrel. The last time we were holding these prices and climbing was in January of 2020 and the world economy was on fire. Spike in world demand and potential tightening of crude supply are the main drivers of price right now. However, in the US, crude inventories decreased, but refined product inventory increased. So a lot of crude was refined into products and stored. And Russia is threatening to leave “the dollar” as the closing currency for crude trades. Ands OPEC+ is discussing further increased outputs in June. In addition, the US is not adding rigs very quickly but a lot can change in the coming months. I’m seeing a potential for crude prices to start falling at some point this summer.
In local news, gasoline retail prices are inching closer to $3/gal. The national average retail price for gasoline is now over $3/gallon. Diesel retail prices have broken through $3/gallon. But diesel prices are a bit higher due to a refinery issue the largest refinery in the Midwest: Bp Whiting. The issue has lasted a few weeks but looks to be fixed, so I expect the cost of diesel to ease a little in our market over the coming week. But don’t expect the price to drop at the pump if crude prices stay high.
Propane inventories finally displayed a large inventory build. Although most of the builds were on the Gulf Coast and the East Coast. The Midwest supply is still under the five-year average. We must continue to increase Midwest inventory. If we don’t and we have a very cold winter, supply will be tight and much pressure will be put on the pipeline and railroad support. Prices have finally taken a breather but could still go higher if inventories do not increase in the coming weeks. Contracts for next season should be released at the end of June or early July.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.