Good morning!
Happy Friday! I hope everyone is staying cool. There is not much to report this week. The possibility of not passing a bill to raise the debt ceiling coupled with some not so great economic data from China and the US sent WTI Crude prices below $70/barrel in the middle of the week. In addition, OPEC+ meets this weekend. Saudi Arabia is calling for possibly more cuts in production while Russia is looking to stay the course. Russia has taken some Saudi market share. However, Saudi Arabia is more interested in gaining cash for diversity investment from oil. Therefore, the calls for Saudi to “flood the market” and teach Russia a lesson I believe are wrong. Saudi Arabia has some of the lowest cash reserves on hand due to continued investment in US and other countries’ companies as well as their own infrastructure. The prediction that Saudi would risk in a demand environment as volatile as we have seen in years seems reckless. Their behavior over the past two years has been much more disciplined and I believe their actions will continue to reflect their on going concerns. WTI oil prices, again, dropped below $70/barrel for about one day on the combo of all the aforementioned news coupled with the EIA report showing builds in national inventory. But as soon as the debt ceiling bill passed the House, and then the Senate, WTI price popped right back above $70/barrel. So prices were on a swing set this week. WTI price started the week above $70/barrel, fell to about $67/barrel mid-week, and then look to end the week at the price right about were it started above $70/barrel. OPEC+ meets over the weekend, so the announced decision from the meeting will drive markets next week.
In local news, refined products followed the crude oil market for the most part. Gasoline prices continue to stay steady as refiners continue to take profit margins over market share based on jitters of lower summer gasoline demand. Diesel prices dropped a bit further due to recession fears. The main drivers of potential recession were the debt ceiling talks, OPEC+ meeting, and the FED raising rates further which would raise crude oil price. But if crude prices drive too high, the possibility of pushing the country into recession becomes stronger which in turn hurts diesel demand. There is a tightrope balancing act going on between oil harvesting and refiners.
Propane prompt prices fell a bit further. However, the out months have been staying fairly steady. I would highly recommend ordering a summer fill and locking in your price for next year. Our summer fill price is probably the lowest we will see and contracts are well under the $2/gallon price of last year. Please call the office to place your order and request a contract. We will be very liberal with summer fill arrangements to try and give everyone the opportunity to take advantage of the low price.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford