STEADY AS SHE GOES

Good afternoon,

Well, the energy markets were fairly calm this week.  Not a lot of movement on crude prices or refined products.  Even though the US, China, and Europe are showing signs of strong recovery coupled with a somewhat tighter supplies, the massive outbreak in India is putting a tight cap on any upside movement.  And as the recoveries begin in some major parts of the world, the reality of the total crude barrels today being voluntarily removed from the market is starting to become a factor.  Although demand is returning with tighter supplies, over 10M barrels/day of crude production is being voluntarily withheld from the market.  As the appetite for crude increases, I have never seen producers remain disciplined for very long.  I am not seeing anything that would cause a massive selloff into the $40’s again, but I do think the talk of extended WTI pricing above $70/barrel is a bit wishful.

In local retail news, gasoline prices have remained higher near the $2.75/gal price point.  Diesel retail prices have remained under $3/gal except for a few larger truck stop chains.  I am hoping that we top out around these prices, otherwise the massive amount of savings from stimulus packages will end up in fuel tanks.

Propane is continuing it’s cautious moves into summer.  We are officially at the third lowest level of inventories over the past 10 years.  The major difference between now and then is exports.  Our export capacity is nearly double compared to other years of low inventories.  I am a bit cautious on whether or not propane supplies will be able build to a point of calm going into winter.  Because of the current supply conditions, allocations and multiple supply points will be vital for success.  I do not expect to see propane prices go much lower.  I am also not seeing much movement on futures pricing.  Unfortunately, I think propane prices for next winter will be near the prices of today.  Hopefully we can maintain prices under $1.50/gal which is usually a good bench mark for good value in comparison to other forms of energy.  More to come on this as we go through May and June.  Stay tuned!

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

Best regards,

Jon Crawford

Crude Prices Take A Jump Higher

Good morning,

The markets were fairly quiet and calm this week except for Wednesday.  On Wednesday, the EIA released their weekly inventory report and the drawdown on crude oil inventories was almost 6M barrels.  The report supported the statements from many shale oil producers saying there were going to hold off on pumping crude back into the market too quickly.  In addition, demand for gasoline and diesel fuel outside of jet fuel is starting to return.  Crude prices spiked over $2/gallon this week.  But, OPEC+ is slowly unwinding their cuts and I do think that eventually someone will blink.  China and India are increasing imports at a dramatic rate and all producers want a slice of that pie.  In addition, Iran and the US continue to try and negotiate a new nuclear deal that will allow Iran to export more oil with transparency.  So although we are experiencing this slight uptick in crude price, I don’t see the trend continuing too much higher.

In retail news, gasoline cost continues to go up, and retail prices continue to go down.  Therefore, I expect to see retail gasoline prices jump fast past $2.69/gallon at any moment.  Diesel retail prices have eased a bit, even though cost has increased.  But I don’t see diesel retail prices going over $3/gal anytime soon.

Propane prices continue their slow and cautious moves lower.  The cold snap in April will provide a bit of support for prices, but national inventories are slowly starting to rebuild.  We have a long ways to go to move our national inventory above the five-year average.  Therefore, I still see prices being higher than usual for summer.  I still believe that customers should consider taking delivery of any contract gallons left on account by end of April.

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

Best regards,

Jon Crawford