Crude Taking A Breather… For Now

Good morning!

Happy Friday!  Crude prices have finally taken a pause to catch their breath.  China is making announcements that they are trying to solve their coal shortage issues by potentially negotiating with Australia.  The US production seems to be soaring in the private sector versus publicly traded companies.  And OPEC+ has hinted that they are watching supplies very closely to try and make sure a major price spike doesn’t derail demand.  I am starting to see the scenario for an unwinding in crude prices starting maybe in Q1 of 2022.  I could see traders ring the register on record returns for crude positions in Q4 of 2021 and take the profit knowing that short-term cap gains taxes could increase in 2022.  I can also see publicly traded companies and OPEC+ start to put more oil on the market in Q1 of 2022 to go after market share if COVID-19 hopefully becomes less of an economic impact on demand.  For now, I will take the pause on the upmarket movement, but I’m not confident we have peaked.  However, the scenarios for lower crude prices next year are starting to take shape.

Local retail prices of gasoline and diesel have stayed very stable this week.  Gasoline retail price should remain above $3.00 on average and diesel near $3.49/gal.  Not much news to report.

Propane prices have also leveled off for the time being due to a scorching September and October so far and a complete lack of corn drying demand.  In addition, exports are finally showing signs of weakness as cost is deterring petro-chem purchasing.  If these scenarios play out, propane prices could at least stabilize at current levels.  Supplies are still tight, but looking to be more manageable due to the previously discusses items.  The question remains on retail heating demand for this winter.  If we have major cold snaps this winter, I do believe that we could see some major price spikes higher.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Best regards,

Jon Crawford

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