Good morning!
I hope everyone had an enjoyable Thanksgiving Day! Since the markets trade on low volume this week due to the holiday, much of the movements will not be realized until the start of next week. As of now, the profit taking for the year is starting to take shape due to the emergence of a 10x mutated variant of Sars-Cov-2 compared to the Delta variant. The world is taking notice. Although the worst case scenario would be a significant step back, we would not be going back to ground zero. However, the news was enough for traders to lock in the profits for the year that I’ve been talking about. Even if the news on the variant comes back as positive in the coming weeks, I don’t expect crude prices to take off. I think the news today was enough to pull a lot of hedge fund firms out of the crude trade, lock in gains, pay taxes at known rates, and move on. The one event of the week that is affecting crude prices positively is the announcement of the Strategic Petroleum Reserve. The SPR has only been used three times in our history to deal with global issues: Persian Gulf War, Hurricane Katrina, and the civil war in Libya. The previously mentioned events were a huge shock to the global supply chain. The situation were are currently experiencing is not a supply shortage. Producers are choosing to withhold product. The SPR release announcement caused crude prices to trade HIGHER because of the inaccuracy of the need for the deployment. The amount of SPR coordinated release changes nothing in the grand picture of global supply. Either the world increases production or not. There are not enough global reserves to dramatically tip the scales. Next week is going to be very interesting to watch!
I do expect to see some relief on pump prices in the coming week. How much is to be determined by how deep and how long the selloff runs.
Propane price have lost a little strength over the past week. Our retail price went down for the first time in six months. I don’t expect to see prices drop too much as we go into the volatile portion of winter. We escaped supply disaster due to low corn drying demand, but we are not out of the woods. Periodic price spikes are continuing to lurk in the background. In other words, I’m taking the recent downward price movement lightly.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford