Happy Friday! WTI Crude prices continue to slowly grind higher. China announced a financial plan to bail out the failing commercial real estate problem. The announcement caused all commercial real estate stocks in China to soar over 75%. In addition, Saudi Arabia announced that they will keep their voluntary additional crude production cuts to 1M barrels/month until the end of the year. Then, in a surprise to everyone, LNG employees in Australia announced a strike which will put pressure on nat gas production globally. Without an increase in crude harvesting, opening up new nat gas production will be difficult. And then fall is here in the US, so harvest is starting. Demand for refined products is skyrocketing across the US which is supporting crude prices as well. And the US economy is trending towards a soft landing rather than a recession. Overall, I do not see any signs pointing to a bearish scenario for crude prices in the months of September or October. I still am holding my call that $80/barrel WTI crude oil is going to be the floor price moving into 2024. In 2024 there are possibilities of some occasional dips in price below $80/barrel presenting some futures buying opportunities. But I don’t see any long-term scenarios holding WTI Crude price below $80/barrel.
In local news, refined products east of the Rockies is an absolute mess. Refineries are down for turnaround and one in particular has been down much longer than anticipated. As harvest begins in the western states, east of Rockies, not enough gasoline was put into inventory and supplies are pinched tight. The price of gasoline in the Spot Group Market shot up over $1/gallon in comparison to the Spot Chicago Market. The blowout caused trucks from Minnesota and Iowa to flood Wisconsin terminals. Therefore, WI terminals have been forced to raise prices to protect product promised for WI contract customers and keep out of state trucks away from WI. In addition, terminals have run out of product and allocations have been put in place all over the state. I expect to see prices for gasoline and diesel increase in WI for the next two months. In addition, finding product will be extremely difficult for distributors as terminals temporarily run out of products. Logistics for supply will be a nightmare. The good news is that we have dealt with this type of scenario many times before and Crawford Oil is positioned very well to survive through the struggle. We will make sure that all our customers receive their deliveries.
Propane prices continue their slow grind higher as crude prices increase. Although our retail price for propane has increased, you can still save some money ordering a fill now and contracting your remainder of gallons for the heating season. Feel free to call our office for more details.
As always, if you have any questions, comments, or concerns please feel free to give us a call.