$70 WTI By End of April?

Good morning,

Crude oil prices have been on an absolute run this week. Continuing from the Syria attacks, crude prices continue to find bullish support in geopolitical tensions. Traders are worried that Trump will pull out of the Iran deal and cause 500k barrels of crude to come off the table which would put the market into deficit by end of summer. In addition, physical inventories in the U.S. dropped to four year lows this week. Then after WTI broke through $67/barrel, Saudi Arabia came out and said that they would love to push WTI crude past $70/barrel towards $80/barrel. Seems like no matter what anyone says that can be interpreted as bullish for crude, traders are finding tread to grind prices higher. An interesting fact though is that the U.S. increased production to another record and is now pumping 10.6M barrels/day of crude. We are getting very close to over taking Russia and our increase in production is happening much faster than expected. At these rates, without any change in supply disruptions from the Middle East or Venezuela, the world crude oil market will start to move into surplus inventory building by the end of the year or sooner. In other words, a major correction could be on the horizon towards the end of the year. I just don’t see what has drastically changed in true physical crude fundamentals to cause a $10/barrel spike in prices. But for now, we are holding on tight until the end of the month.

In local news, spreads in gasoline prices are all over the marketplace. The fact is that gasoline and diesel prices have gone up. I expect to see gasoline prices well above $2.49 gallon, and diesel prices above $2.89/gallon.

Propane has steadied out due to the massive increase in demand for April. We are officially experiencing the coldest April on record which is very supportive of propane prices. Like crude oil, we are hanging on tight until the end of the month and then reevaluating. Information on summer fill and next season’s contracts will follow at some point in June.

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

Best regards,

Jon Crawford – Pres.
Crawford Oil and Propane

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