Good afternoon!
I hope this message finds you well. The bears in the crude oil trade are trying to move the floor price below $90/barrel. But they failed to accomplish the job, in spite of strong bearish sentiment and news. The dollar continues to gain strength which increases the purchasing power for crude oil. The action usually lowers the price of crude on the market. In addition, the amount of savings in the hands of consumers is dropping fast. Student loan repayments are beginning. And inflation is starting to sting in many areas of the economy. And China is still struggling with their commercial real estate problem. However, Saudi Arabia and Russia remain lock-step in limiting crude oil and refined supplies to the market. And the US reserves of crude oil continue to drop to lowest levels in years. As demand for crude oil in the US ramps up with the harvest, suppliers and refiners are remain disciplined and not oversuppling the market at home. The actions of world oil producers and the US oil industry are winning the battle between the bears and bulls. Therefore, even though the world economic data was awful this week, WTI crude oil still closed above $90/barrel to finish the week.
Diesel prices out of Chicago started to move higher as differentials changed in cycle timing. Although Chicago is still cheap for diesel in comparison to other spot markets, I am still betting that harvest is going to cause diesel inventories to drop and prices to rise. Gasoline continues to be very long in the market and remains trading flat-to-down. I don’t expect to see any major jump in gasoline prices anytime soon. Even though diesel prices rose this week, I remain firm on my recommendation to keep your diesel tanks full.
Propane continues to trade in a narrow range. The heating season is officially underway, although it doesn’t feel like it! I expect propane to move higher as the winter goes along. Producers of propane are sounding alarms loud and clear that they just won’t sell propane for much cheaper than the current trading price. Keep-fills have started and before we know it, the weather will be cold and the holidays will be here! Enjoy the hot weekend while you can!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford