Crude Confusion For Christmas?

Good morning!

Happy Friday!  WTI crude prices shot up through $70/barrel on the hype of continued increased world demand.  In addition, Saudi Arabia announced price increases for shipments starting in January.  However, the news also gives further support to the continued increased production from the US and OPEC+ going into 2022.  The FED continues to push for rate increases in 2022 and inflation data is off the charts!  I am still sitting on the sidelines waiting for the end of the year to pass.  Markets can behave irrationally, and I am seeing some irrationality taking hold into year end.  Besides the current economic facts surrounding crude oil, I am watching some of the smartest people sell their stocks.  Elon Musk, Jeff Bezos, and Chamath Palihapitiya are all clearing positions going into the the year end.  If a market correction happens, crude prices will sink as well.  I can also see world oil supply going into surplus in Q1 of 2022.  Therefore, in the meantime I am keeping Pepto-Bismol handy and hoping for some entry positions on futures buying to open up the first part of next year.

In local news, gasoline and diesel retail prices have stabilized.  There was a quick sell-off on pricing in the market, but Chicago quickly recovered due to some refinery issues in Toledo, OH.  As crude prices recovered, we are now stable in the market at current retail prices.

Propane prices have stabilized as well with crude oil, but I think propane is oversold.  Propane prices coupled with crude oil on the news of warmer weather.  Yes, propane supplies are getting better, but any sort of cold snap is prime for a whip-saw higher on propane prices.  Propane price has been de-coupled from crude price all year, so am skeptical on the current congruent movement.  For now, customer that didn’t contract at higher prices are getting a little relief, but I don’t see propane prices holding at current levels long-term.  There is too much winter left in the season.  As a reminder, please make sure your driveway is plowed and salted if necessary, and there is a clear path to your tank to receive your propane delivery.  The snow will be here before we know it!

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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