Crude Prices Take A Jump Higher

Good morning,

The markets were fairly quiet and calm this week except for Wednesday.  On Wednesday, the EIA released their weekly inventory report and the drawdown on crude oil inventories was almost 6M barrels.  The report supported the statements from many shale oil producers saying there were going to hold off on pumping crude back into the market too quickly.  In addition, demand for gasoline and diesel fuel outside of jet fuel is starting to return.  Crude prices spiked over $2/gallon this week.  But, OPEC+ is slowly unwinding their cuts and I do think that eventually someone will blink.  China and India are increasing imports at a dramatic rate and all producers want a slice of that pie.  In addition, Iran and the US continue to try and negotiate a new nuclear deal that will allow Iran to export more oil with transparency.  So although we are experiencing this slight uptick in crude price, I don’t see the trend continuing too much higher.

In retail news, gasoline cost continues to go up, and retail prices continue to go down.  Therefore, I expect to see retail gasoline prices jump fast past $2.69/gallon at any moment.  Diesel retail prices have eased a bit, even though cost has increased.  But I don’t see diesel retail prices going over $3/gal anytime soon.

Propane prices continue their slow and cautious moves lower.  The cold snap in April will provide a bit of support for prices, but national inventories are slowly starting to rebuild.  We have a long ways to go to move our national inventory above the five-year average.  Therefore, I still see prices being higher than usual for summer.  I still believe that customers should consider taking delivery of any contract gallons left on account by end of April.

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

Best regards,

Jon Crawford

Crude Prices Trading in Narrow Range

Good morning,

Crude prices traded in a very narrow range this week.  Supplies are ample and demand is healthy in the largest economies, but the virus variants and targeted lockdowns in various countries are keeping any major price runup in check.  On the downside, a potential deal with the US and Iran is back on the table which would throw the crude markets into supply surplus.  The beginning of talks is putting downward pressure on crude prices, but not too much pressure as the negotiations with Iran are usually quite volatile and unpredictable.  For now, WTI crude price seems to be in a holding pattern around $59/barrel.  Jobless claims were a bit higher than expected and small business closures are climbing which is keeping American demand in check.  However, vaccinations are flowing at a record pace and a fourth wave seems like it will be targeted areas as opposed to widespread.  The crude market continues to be in a push-pull relationship with many economic issues, but the range of the swing has become much more narrow.

In local retail news, gasoline prices have eased a little from recent highs, but not much.  I don’t see gasoline retail prices falling below $2.49/gallon anytime soon based on current market conditions.  Diesel cost has also balanced out which will keep retail prices from breaching $3/gallon which is good for farming, construction, and shipping this spring.

Propane prices continue to slowly unwind but not as fast as some would like.  I am not expecting very cheap summer fill prices below $1.  I also know that next season’s heating contracts will be priced higher than this year.  I highly recommend that customers take delivery of any remaining contract gallons on their account.  If propane prices start to drop dramatically, I don’t see that possibly happening until at least August.  Stay tuned for more info as we wind down the heating season and approach allocation building season.

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

Best regards,

Jon Crawford