Late sell-off, but still holding on!

Good afternoon!

I hope this message finds you all well. I am writing my weekly update a bit early. WTI crude prices were on a ride higher for four straight days based on the strong dollar and talks of no recession, as well as American oil companies announcing they plan to be disciplined just like OPEC to try keep WTI price above $70/barrel. Oil companies across the globe have made it pretty clear that $70/barrel WTI is the price floor. Although there was a slight sell-off and profit taking today, WTI will still not close below $70/barrel today. Inflation data was “devil in details” like usual, China’s economy slowed less than anticipated, the EIA reported large draws in gasoline and distillates, and the UK is confident they will avoid recession. But, the big news supporting crude oil prices is once again Pres Biden saying he is going to start purchasing crude oil to refill the Strategic Petroleum Reserve. The SPR is currently at the lowest level since 1983. Since making the statement public, support for crude oil prices will remain strong. The sell-off today was a bit of profit taking on the latest run higher and Jamie Dimon from Chase bank saying that the mid-bank failures might not be over yet. So you combine a bit of higher prices with some fear thrown in there and traders with try and bet on the arbitrage. I think we will experience WTI prices climbing back higher tomorrow into the weekend.

In local news, gasoline and diesel cost rose over 30 cents in the past four trading sessions before giving back a bit today. In our local market, we are now into farm season coupled with refinery maintenance. I think we have some supply issues working their way out between the Group and Chicago spot markets. For now, I expect to see diesel prices and gasoline prices remain higher than the low last Monday. Even if crude prices fall, we could experience higher prices in finished product due to refiners running into issues with their maintenance and looking to export barrels instead of keeping wet barrels in local markets. Only time will tell.

Propane has been looking very steady and making small prices moves with the WTI crude oil trade. The good news is that summer fill prices continue to drop. Now is a great time to fill your tank, and I think next week heating contracts for 2023-2024 season will be available! The contract price for next heating season will be much lower than the previous winter season. During a time of inflation, propane is experiencing deflationary pressure due to an abundance of inventory, even though exports are at record levels. In addition, we don’t see production slowing anytime soon. Keep your eyes peeled for the contract mailing or feel free to call us next week. Remember, filling your tank in the summer benefits the supplier by giving the supplier allocation access for the coming winter to guarantee that propane will be efficiently available in the marketplace. We are a bit more flexible with our summer fill volumes to try and help everyone take advantage of cheaper prices.

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

Best regards,

Jon Crawford

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