Good morning,
As I stated before, I believed the claw back on crude was too quick and would correct at some point in March. Well, we are at March 2nd and WTI is close to breaking back below $60/barrel! As I like to say, what a difference a week makes! Oil production is continuing to rise and stocks are building again in the U.S. going into the spring maintenance season. OPEC is getting wavy on commitments due to the U.S. has Russia in their sights to overtake on production. Also, our dollar is finally gaining back some strength from the recent sell off a couple weeks back. And just like that, crude prices fall $4/barrel. I don’t think we are out of the woods yet. Crude might tumble a bit more, but I feel that crude will trade in the $55-$60/barrel average range for maybe the year if all components stay constant.
In local retail news, I am suggesting that all farmers lock in some portion of fall fuel needs at this time. We have some excellent prices and I believe one should hedge the supply crunch that always occurs in October and November due to the harvest and refinery maintenance. Gasoline retail prices will remain somewhat in the current range due to the change in RVP for summer. This change adds a premium cost to gasoline. As the temperatures rise and costs of product fall, I expect to see diesel prices at the pump come down a little bit. Most of this will be from retailers no longer having to blend products with #1 diesel to meet winter usage needs.
Propane prices are falling off as predicted. We are not locking in next season contracts for customers yet, but the numbers are looking very good for next heating season in comparison to this year. We suggest that all customers fill their tanks this summer and lock in prices when available this summer. More information will available in the coming months.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford – Pres.