Tug of War
Good morning,
Crude prices this week are stuck in a game of “Tug of War” right now between geopolitical issues and true fundamentals. Global recession fears are weighing on traders’ minds as we end the year which is keeping “Big Money” from going long on crude. The fears are weighed by China/US trade war, disappointing economic data, and BREXIT drama. Not to mention that Saudi Arabia and Russia continue to make headlines which have potential for supply issues. But in true fundamentals, the US exported more crude than consumed last month. So there are buyers out there. It’s a head scratcher. Big Money is stuck on short positions right now which I think will hold until the end of the year. I feel that money managers are going to look at January as a potential entry point on crude. So for now, enjoy the Christmas gift that the traders have given us! But when Big Money enters the market, be prepared for a quick increase in crude prices. And I do believe it’s not a matter of “if”, but “when”.
Retail prices on gasoline and diesel have stabilized for the moment. We are looking at around $2.15/gallon on gasoline and $3.00/gallon on diesel. I think that these prices will hold potentially for the end of the month.
Propane prices have also stabilized but are starting to carve out the potential for an uptick. Demand is rip-roaring right now. The current warm spell is looking to end by Christmas, with the potential for colder than normal coming back, including a possible Polar Vortex in early January. As always, please make sure your driveway is clear and there is a path to your tank this winter.
If you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford – Pres.
OPEC Meeting Disappoints
Good afternoon,
The big OPEC meeting today in Vienna did not impress traders. Hopes were for over a 1.5M barrel/day cut, and that does not look like it will happen, even when Russia weighs in tomorrow. In addition, the economic outlook is starting to look weak for the U.S. which is causing a massive sell off in the market. To top it off, China and U.S. trade tensions are high with summit talks being interpreted differently between the two countries as well as Canada arresting an executive from the Chinese firm Huawei. The traders have reacted by selling off even more crude contracts. WTI crude prices have now dropped back to their lows for the year. The bullish news being reported was a major drop in crude supplies here in the U.S., Iran threatening to block the Straight of Hormuz, and Canada offering to cut crude production to help prop up prices. For now, traders seem to think the world is entering closer to surplus on crude supplies and bearish news on the economy is winning the war of words. For now, cheap oil prices are maybe here to stay until year end. We will need to wait for Russia’s reaction as well as OPEC’s official report.
In local news, retail prices on gasoline have bottomed out near $2.19/gallon, and retail diesel prices are right around $3.00/gallon depending on the winter blending applied. I would expect to see these lower prices through Christmas. So for now, we can enjoy some lower prices for the holiday season!
Propane prices have bottomed as demand continues to climb. We officially experienced the coldest November on record. For all will-call customers, please make sure to keep an eye on your propane tank. Usage is up more than 20% this year. As a reminder, please make sure to have yoru driveway cleared and a path available to your tank throughout the winter. We appreciate all your help for making safe and efficient deliveries.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford – Pres.