Up, Up, And Away!

Good morning!

Happy Friday! I took last week off due to Spring Break. Unfortunately, the crude oil market is finding lots of support to continue the run higher in price. The war in Gaza escalated this week as Israel not only targeted the Iranian Embassy in Syria, but also mistakenly killed aid workers in Gaza. The geopolitical risks for higher crude prices kicked into full gear as expected. The US economy continues to run hot and calls on the FED cuts are all over the map. There is no consistency on if/when FED cuts will take place. The US crude oil inventories increased this week. However, gasoline and diesel inventories dropped. The report was interpreted as bullish. However, most of the refined products are being exported. The US economy seems to be healthy, but there are headwinds as cash/credit tighten with the consumer. If consumer spending starts to drop going into the summer, we could see a pull-back in crude prices. To add additional fuel to the bull-fire, OPEC+ met online and decided to keep cuts in place. Algeria and Iraq continue to pump over quota, and Venezuelan crude will find a home potentially in China. Russia’s exports have fallen, but the drop is temporary. Saudi Arabia announced this week that they are unable to meet their 2030 vision goals at the current rate of investment and crude oil sales. Although Saudi Arabia wants WTI crude oil to be closer to $100/barrel, the possibility of the Saudi’s increasing production moves onto the table if competition continues to take market share. I continue to sit back and watch everything play out. We are approaching a very intense presidential election in the US. If WTI oil continues to climb and hit $100/barrel, voters will be inclined to take out the “pain at the pump” on a sitting President. In my opinion, Biden will do everything in his power to try and lower oil prices going into November.

In local news, diesel prices have moved much higher with the increase in crude prices. Gasoline prices have remained fairly flat. The Chicago market seems to be sending a message that they are over-supplied with gasoline. We are starting to approach hurricane season and NOAA is calling for an intense and jam-packed storm season. The potential for “mini-blowouts” in basis pricing is on the table this summer and early fall.

Propane prices have moved higher in tandem with crude oil prices. However, propane cost has not moved higher at the same percentage to crude oil price movement. Summer fill season is right around the corner, and as customers finish up their contract pricing from the current season, they are pleased to hear the current retail price of propane is lower. Next year’s contracts will probably be coming out in May sometime, so more to come. Oh, and this current winter is now running at 12% warmer than last year, breaking the record for the warmest winter EVER!

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

Best regards,

Jon Crawford

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