Irritated Scalp From All The Scratching

Good morning!

Happy Friday! Well, again, the week is ending on a complete head-scratcher. WTI crude oil price continues to remain under $85/barrel! The US and Chinese economy continue to stay strong, even with US inflation and CPI remaining hot. The EIA reported a massive draw-down in national crude oil inventories. The US passed a resolution sending more weapons to Ukraine and Israel. The US is sending long range ballistic missiles to Ukraine for the first time ever in the war. The missiles have the capability of striking all of Russia’s ports and oil infrastructure. Israel is providing over 40,000 tents to the Palestinians in Rafah to prepare for the Israeli invasion. Biden and others are discussing tighter sanctions on Iran and Venezuela after each country reported large crude oil sales to China. Blinken and others are discussing raising tariffs on Chinese exports to thwart off China flooding the market with their continued inventory growth of exportable goods. Although Iran has said they will not retaliate towards Israel anymore, Iran did say they will consider attacking ships in the Straight of Hormuz and the Red Sea. Honestly, all of the news this week was very bullish for crude oil prices. However, crude oil prices dropped throughout the week! The prices for crude oil are looking to close around the same price as last week’s close. Therefore, since crude oil price continue to stay soft during a period of high bullish activity, many traders liquidated their short positions and bought long crude oil prices. The largest number of options trading on the market in over a year occured all within this week! Again, everything happening from supply/demand, market reports, to geopolitical issues are all pointing to higher crude oil prices. I continue to remain long crude oil prices.

In local news, Chicago Spot Market remains well supplied with gasoline and diesel. Prices have eased a bit with the drop in crude prices. Therefore, I do expect to see lower retail prices at the pump. We are looking at two weeks of softening gasoline and diesel prices in our market. Therefore, I believe there is a lot of value at today’s retail price for gasoline and diesel. I am definitely a buyer at these prices.

Propane prices continue to trade in a narrow range. The EIA report on propane inventories was a bit bullish this week. Unless crude oil price falls off a cliff, I don’t expect propane prices to drop much more. Next season’s heating contracts should come out next month. I highly recommend everything buying propane in the summer. As I stated earlier, I am still long crude oil price and believe prices will rise this summer and continue until the end of the year.

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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