I hope everyone enjoyed their 4th of July celebration and was safe. With a short week in trading and many traders on vacation, the markets were very out of balance the past seven days due to light volumes. However, news hit the airwaves that many OPEC countries, including Saudi Arabia increased exports in June. There is a delicate balance between the continued increase in exports and the production cuts. In addition, the U.S. seems to be hitting a peak in production and I think will be taking a breather for a bit. I don’t think we will see much change in the oil rig counts until we get through summer. The EIA released it’s weekly inventory report today, and although the results look bullish on the surface, crude oil gave back all the initial gains by the day’s end. The national crude oil inventories decreased 6.3MM barrels, gasoline decreased by 3.7MM barrels, distillates decreased by 1.9MM barrels, and propane inventories increased by 2.1MM barrels. The only disappointment in my opinion was the propane build. I was hoping with the holiday week, we might have seen that number closer to 2.5MM barrels. As propane inventories continue to lag, the crop drying situation continues to point more towards higher demand this fall. With inventories at historical lows based on demand, I am still calling for a price spike in propane this year regardless of price in crude.
In local news, gasoline prices have averaged out to about $2.15/gallon and diesel prices around $2.39/gallon. Propane summer fill is in full swing. I am highly recommending that everyone fill their tanks this summer. The current price is very attractive compared to future contract pricing. We also have released our contracts for next year. Please call the office now for current prices on summer fill and heating contracts.
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
After weeks of downward momentum, crude oil finally found some support in the last couple of days on a falling dollar and draw in U.S. petroleum inventories. The data caused some traders to cover some short positions and in doing so has developed some support for crude prices. I am reluctant to call a “bottom”. Summer demand is in full swing and consumption has not been stellar. In addition, storage facilities on the East Coast are filling up and the oil rig count continues to rise. In addition, Nigeria and Libya increased production in June and even Saudi Arabia increased exports in June. Unfortunately, I am not seeing where demand is outstripping the glut of crude we continue to keep on hand. Therefore, I am calling the last few days as a short covering rally and nothing to be too excited about. I am still calling that we will not see crude above $50 by the end of summer. The EIA reported national crude inventory draws of 1.3MM barrels, gasoline draws of 900k barrels, distillate draws of 200k barrels, and propane builds of 3.9MM barrels. The draws were all in line with expectations and better than some. Propane’s large build was mainly offset by the tropical storm in the south. All exports were shut off due to the storm last week. So if you take that into account, the build in propane inventory was modest at best and still leaving us well behind the inventory levels needed for winter. I am still calling for a quick rally in propane prices at some point in the next two months.
In local retail news, gasoline prices are holding around $2.17/gallon and diesel prices are around $2.39/gallon. Propane is at the lowest price of the year. I recommend that everyone fill up their propane tanks this summer. I also recommend that everyone lock in their price for next year. There is a major risk of propane price spikes in 2017-2018 due to low inventories and the potential for larger than average crop drying demand.
As always, if you have any questions, comments, or concerns, please feel free to give me a call.
Jon Crawford – Pres.