Good evening!
I hope this message finds everyone well. I wanted to first announce that there will be no updates for at least the next two weeks as I travel with family. But I’ll get back into the swing of things when I return!
WTI crude oil traded this week again in the same narrow range of just below $70/barrel and just above $70/barrel. OPEC+ had their meeting last weekend and decided to keep current cuts in place. However, Saudi Arabia voluntarily announced another 1M barrels/day cut in oil production. The additional cut puts Saudi Arabia’s production at the lowest level in over 20 years. The news pushed the oil markets higher to start the week. But as the week dragged on, recession fears and too much refined products in America started to move crude prices lower. Even though crude prices eased a bit based on recession fears, refiners are being very vigilant to keep refined prices high. Producers and refiners are very comfortable selling less product for more money. The mentality of “less for more” is new since Covid and doesn’t seem to be going away. And as margins increase from production to refining, the cost is passed along all the way to the end consumer. And as the cost other goods and services remain inflated, I expect to see healthy margins on gasoline and diesel at the pump as well.
In local news, farming is in full swing, even though most of the Midwest is in drought. Supply tightness coming out of Chicago is keeping a floor on both gasoline and diesel prices, and even pushing them higher. I expect prices for gasoline and diesel to remain inflated throughout farming season and throughout summer into harvest.
Propane prices continue to remain weaker in comparison to other commodities. We highly recommend everyone take a summer fill now and contract their next season’s heating gallons. Considering how weak propane is trading in percentage to crude, if crude oil breaks out higher in price, propane price will follow. Our contracts are slowly being mailed out, but feel free to call our office, order a summer fill, and lock in your price for next heating season!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford