Good morning!
Happy Friday! Never before in my life have I seen so many bullish situations for crude oil prices. But this week, oil prices DROPPED! Iran attacked Israel this past week, and Israel struck Iran last night. The retaliation from Israel caused prices of crude oil overnight to surge higher. But because the strike was not as large as expected, crude oil prices started out lower this morning! Iran responded by saying that they will now retaliate to Israel’s response. From all angles, sounds to me that Israel and Iran are officially in direct conflict. Biden and other European leaders have been trying to deescalate the the situation to no avail. Iran strongly supports the continued hijacking of oil tankers in the region. The Houthis’ will continue their attacks in the Red Sea. Hezbollah said they will continue their strikes on Israel. Russia said they will not let up on attacking Ukrainian energy infrastructure. Ukraine said they will continue to attack Russian oil infrastructure. I have never seen so much instability in the Middle East in my entire career. And the world’s largest commodity trade rests in the heart of all these conflicts: oil. With the presidential campaign on the way, oil price is a top issue. Biden must keep oil prices low in order to help his chances of reelection. Somehow, traders are shrugging off the most intense threats to oil supply. I believe that eventually the Middle East situation along with Russia/Ukraine is going to end up affecting oil supplies causing a major spike in oil price. For now, we can watch how the most irrational market behaves in the coming weeks.
In local news, gasoline and diesel prices dropped in tandem with the price of crude oil. The Chicago Spot market is well supplied. Therefore, I do expect to see prices of gasoline and diesel move lower in the coming week.
Propane prices dipped a bit this week, but not as much compared to the percentage price drop of crude oil. Propane future prices are finding a floor that I believe will be hard to break. I am still bullish on propane prices for the rest of the year and into 2025. Next season’s heating contracts will probably come out next month. So more to come!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford