Trade War and Recession Fears Grow
Good afternoon,
WTI Crude prices continue to trade in their narrow range of about $53-57/barrel. On the supply side, with the current OPEC cuts in place, the Venezuela shut down, and the US slowly shutting down rigs, the market is actually tighter than the price is displaying. Right now, all eyes and ears are on recession fears due to the trade war with China. If the world economy slows down, then I don’t expect crude prices to tank much more than below $50/barrel. So much of the recession fear is baked into the current price. However, if the trade war starts to wind down and the world economy continues as is, then we could easily experience a $7-10 spike in crude prices. The FED said that they are willing to act appropriately but not committed to rate cuts and the trade with China does not seem to be slowing down anytime soon. For now, WTI crude will continue to bounce in mid $50’s.
Retail prices on gasoline and diesel have continued to ease. Gas prices have fallen below $2.49/gallon in some markets, and diesel has dropped below $2.69. I expect to see these lower prices at the pump through Labor Day.
Propane prices are at historical lows and inventories remain at historical highs. We expect propane inventories to hit the largest volume ever recorded. We encourage everyone to enjoy these low prices with a summer fill and contract for the next heating season. Please call our office or go online to place an order!
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford – Pres.
Recession Fears Drag Down Crude Prices
Greetings!
Another wild ride for crude prices this week. The week started off with crude prices skyrocketing higher on the announcement that Trump would delay additional Chinese tariffs. The news coincided with Saudi Arabia announcing another run at taking Aramco public and saying they will do whatever it takes to keep prices from going lower. But oh, what a difference a day makes. China responded by continuing to devalue their currency and markets got a little shaky. Then, the US reported large builds in crude and refined product inventories. As crude prices started to fall, the bond market displayed indications of a looming recession and the stock market along with crude prices cratered. We are now back to almost the low price of the year again in three days! I would expect Saudi Arabia to start hitting the airwaves again soon if this continues. I just don’t see them allowing WTI to fall below $50/barrel.
In local retail news, prices for gasoline and diesel are all over the map due to high fluctuations in cost and price spreads between terminals marketing either Chicago Spot or Group 3 Spot. I expect wild discrepancies on street prices of gasoline and diesel over the next month or two.
Propane prices continue to stay very low based on high volume of national inventory. Please take advantage of summer fill prices. With the potential for high corn drying demand and an additional export terminal coming on board in Q4, propane prices could start to swing up quickly by the end of the year. Please call our office or go online to place an order. If you have not contracted propane for the next heating season, I also suggest talking with our staff about options that might work for you.
If you have any questions, comments, or concerns, please feel free to give us a call!
Best regards,
Jon Crawford – Pres.