Iran Tensions Sending Prices Higher

Good morning,

This week crude prices have increased based on tensions with Iran in the Middle East.  Reports of attacks on crude ships, drones attacking Saudi Arabia pipelines, Iran carrying missiles at sea, UK and US evacuating embassies in Iraq, and the US sending aircraft carriers and defense systems to the region are all putting a huge risk premium on crude prices.   Crude prices would be going even higher, but the tensions with China and the trade war are keeping a lid on a full breakout to the upside.  President Trump is sending messages that he wants to talk with Iran.  If diplomatic talks can be scheduled and firepower starts to recede, I expect to see prices fall right back down.  Next week will be a big week for crude.  In addition to the geopolitical issues, the US is about to enter its peak demand season.  World demand is staying neutral at the moment and on pins and needles with the trade war.  Supplies are ample, but if Venezuela and Iran truly can’t get crude to market, then we could experience some supply tightness in Q3 and Q4.  Next week will be very interesting to watch.

In local news, just as retail prices were starting to recede a little, prices have jumped right back up.  I expect to see retail prices hold or climb on both gasoline and diesel going into Memorial Day weekend.

Propane prices are at the lowest level of the past three years.  I recommend everyone filling their tanks right now.  There is much more risk of upside price movement in propane.  Contracts will be coming out in a month or so.  Stay tuned for more info.

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

Best regards,

Jon Crawford

Crude Pulls Back / Propane at New Price Lows

Good afternoon,

Crude prices pulled back from recent highs due to massive builds in inventories here in the US this week.  In addition, there are a lot of global concerns on demand and how Russia will react to the next OPEC meeting.  The markets are very ripe for crude supplies to turn to surplus, so the fear has put a quick profit taking reaction in play.  The recent pullback is kind of the calm before the storm.  I think we are experiencing a breather in the moment.  If Russia pulls out of the deal, we could easily see crude prices fall $5-7/barrel.  If OPEC steadies with cuts, I think the markets will try a new high.  For now, it’s the yo-yo effect between $62-65/barrel WTI.  More will develop in the coming weeks.

Retail prices on gasoline and diesel have balanced out.  I expect to see current pricing at the pump hold over the coming week.  Refinery maintenance in Chicago has experienced some relief and supplies are flowing again.

Propane prices have continued their detachment from crude.  Right now, our retail price is the lowest it has been in over a year!  If you are in need of propane, now would be a great time to buy!  Contract prices for next heating season are looking to be at or lower than this current year’s contracts.  More info will continue to be released in the coming weeks.

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

Best regards,

Jon Crawford