The crude oil picture continues to be interesting. OPEC has continued to push exporting of refined products with little drawdown in inventory, showing that the glut of crude is not curtailing as quickly as planned. However, the U.S. production is starting to peak and inventories of crude fell for the second straight week causing a knee-jerk rally earlier today after the sell-off Friday on the news of more rigs added into production. But then the dollar, which has been pounded recently, started to rally hard on news from Janet Yellen that rate hikes are going to continue to come. In other words; volatility, volatility, volatility. I still believe that we are going to see crude trade in the $42-48 range for the remainder of the year.
The weekly EIA Inventory report showed a 7.6MM barrel draw in crude inventories, a surprise build of 3.1MM barrels of distillates, a small draw of 1.6MM barrels of gasoline, and a less than stellar build of 1.7MM barrels of propane. As I stated earlier, and bullish reaction to this report has been capped by the FED reporting. The important number is the propane build. The build is still very weak in terms of the past week and holiday. Unless a surprise large build comes next week, I am holding firm on a future price spike in propane and supply tightness.
In local retail news, gasoline prices averaged around $2.15/gallon and diesel prices around $2.39/gal. Our summer-fill program has started for propane and we are currently at the lowest prices of the year! Please call now to have your tank filled and sign up for one of our contract options. I highly recommend everyone contracting this year due to limited supplies and the potential for large price spike.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Jon Crawford – Pres.
Crawford Oil and Propane