Arctic Blast Is Over!!!
Good morning,
I hope this message finds everyone safe and sound coming out of the coldest weather experienced in 30 years. Our company worked overtime and extra hard to keep everyone safe. If the temperature climbs to over 40 degrees this weekend, it will be an 80 degree swing in 48 hours!!! Regardless, I appreciate everyone’s patience as we worked in extreme temps to care for our customers. And a special hank you to the customers who worked with us to help with spreading out deliveries to make sure those in emergency situations were taken care of you. Your honesty and willingness to help was very much appreciated!
In world news, crude oil prices climbed 18% in January to start the year as I expected. Crude oil prices were very undervalued to start 2019. Now we are carving out a range of $50-55/barrel WTI until a few things flush out. OPEC+ and their crude cuts will be under scrutiny in the coming months. Mostly we need to see Russia stepping up to their commitments. China’s economy is continuing to contract so the news is very bearish for crude prices. But the contraction could bring China to the negotiating table on a trade deal which would be very bullish for crude. Here in the US we just don’t stop pumping crude. And the FED is probably deciding to hold off on rate increases which would hope to spark more demand in crude in relation to the devaluing of crude prices. So February is going to be an interesting month for watching data. I think after this month we will have a better idea as to where crude prices might be heading. More to come.
In local news, gasoline prices are starting to pop up above $2/gallon. I expect to see the trend continue as gasoline cost basis in our area jumped higher this week. Diesel prices continue to climb as well. I expect to see diesel prices at the pump continue to rise as well.
Propane prices have remained stable with high production and high demand. Propane is in a spot of homeostasis. So if demand erodes or production quits, hold on. Things could change quickly. For now, please make sure your driveway is clean and clear to make sure we are able to safely and efficiency deliver propane to your house.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford – Pres.
Public Service Announcement: EXTREME COLD
Good morning,
I would like to discuss the EXTREME cold temperatures that are hitting our area for the next week. The arctic blast from the Polar Vortex is going to hang around for some time. In addition, we might see snow on Monday. If you are a will-call heating oil or propane customer, please keep an eye on your tank. Your consumption will greatly increase over the coming days. These temperatures are very dangerous so please take caution when being outside. Frostbite can happen in under 30 minutes with some of the temperatures predicted. Our drivers are working extra hard to stay ahead of this cold snap. Please make sure that your driveway is cleared and there is a safe path to your tank. We want to complete safe and efficient deliveries over the coming week.
As far as prices are concerned, crude oil continues to be volatile. The biggest news that we continue to monitor are the developments in Venezuela and the US government shutdown. The potential for lost crude imports from Venezuela could impact the US. We import about 300K barrels of heavy crude from Venezuela and the loss of that product could push up diesel prices. The government shutdown continues to put pressure on the economy. As long as the government opens soon and the Chinese/US trade teams continue to talk, we expect to see crude oil consumption stay healthy this year.
In local news, the crack spreads on diesel in the Chicago market dried up driving the cost of diesel in our market up by more than 20 cents/gallon. Our cost is now on average with the rest of the East of Rockies markets. I expect to see diesel prices at the pump rise. Gasoline retail prices continue to resist breaking back over $2/gallon. I would expect to see most markets back above $2/gallon in the near future.
Propane prices are starting to creep back up with winter weather causing healthy demand. However, production is very strong and inventories are high. So I don’t see any potential for major prices moves higher in propane this winter.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford – Pres.