Good afternoon,
I hope this message finds you well. Crude prices dropped dramatically this week as the delta variant continued to spook investors on world demand for crude. Also, many large retailers started to show a slowing down of their burning hot sales over the past year. And then the FED announcement looks to position towards a tapering of bond purchases signaling a rate increase maybe next year. As demand threats pulled down crude prices, the FED announcement gave strength to the dollar which pulled crude prices down even further. Now that WTI crude prices are below $65/barrel, the possibility of sub-$60/barrel is on the table. WTI is approaching a price range that is more in the normal pre-pandemic years of healthy crude oil supply and demand economics. However, with the unrest in Afghanistan and lock-downs in China, anything can happen.
Retail prices of gasoline and diesel will probably start to ease next week with the drop in crude prices. Considering the tight margin markets and summer demand starting to diminish as school starts, I don’t expect to see dramatic drops in prices at the pump.
Propane price continues to hold very firm, even in a downward market momentum for crude oil. Propane inventories are now officially at eight year lows and exports are kicking back up again! I believe the only way out of the propane supply mess at this point is higher prices. The arb between US and Middle East exports has to increase. There has been small dips here and there but overall, the price of propane continues to hold and track towards higher as we go. If you have not contracted your propane for the season, there is still time to call and lock it in.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford