Bulls On Parade

Good afternoon!

Nothing seems to stop the bulls from taking crude prices higher.  The US Jobs report was better than expected so the fears around recession melted away.  The FED continues to talk of lower rates and the US oil rig count continues to drop.  In World News, Libya is experiencing turmoil which can affect oil exports, and Saudi Arabia announced that its largest oil field is producing much less than expected.  And the US/China trade deal looks like “all systems go”.  All-in-all, the data is showing high demand with robust economic indicators.  However…. The US continues to produce record levels of crude with less rigs, showing that we are becoming more nimble and efficient.  Russia is wanting out of the OPEC cuts and does not want to see the price of oil get much higher.  And world demand continues to hang on every announcement.  Basically, we are starting to enter price territory where price will affect world demand.  In conclusion, as I have been saying, the ride up is not over yet, but I’m not so sure it will hold on for the rest of the year.

In local retail news, gasoline retail prices continue to hold around $2.69/gallon and diesel under $3.00/gallon.  With the continued rise in crude prices, I don’t expect to see any downward movement in prices at the pump in the foreseeable future.

Propane prices are starting to drop and I expect to see prices continue the downward movement.  We have only seen propane prices detach from crude price movement a few times in the the past, and it is happening now.  Propane supplies are at record levels for this time of year and are only continuing to increase.  In addition, exports are remaining robust and we expect inventory levels to continue to increase.  Therefore, it’s not a question of “if” propane prices will go lower, it’s a question of “how low” propane prices will go.  For now, we sit back and wait for summer fill prices to come out along with next season’s heating contracts.

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

Best regards,

Jon Crawford

Crude Prices Continue To Hold

Good morning,

The market looks like WTI will hold price above $60/barrel this week.  There are so many variables flying around right now.  The bulls are being pushed by FED keeping rates low, Saudi Arabia hammering cuts through 2019, Iran and Venezuela sanctions, positive progress on the US and China trade talks, and feelings of healthy demand appetite for crude oil.  The bears on the sidelines are staying active following weak economic data out of China, a not-so-thrilling housing market in the US, record US production, Russia discussing leaving the OPEC cuts, Trump hammering on OPEC to stop cutting, investors such as Warren Buffet saying our economy is out of steam, and potential extension of supply waivers for countries buying from Iran.  So basically you have a full hand of cards showing bull market strength, and a full hand of cards showing bear market strength.  I don’t like to keep sounding like a skipping record, but crude is probably going to trade back and forth in a $5/barrel range for the next quarter until data starts to truly back one of the hands in play.

In local retail news, I believe gasoline is a bit overbought going into refinery maintenance season.  We could see gasoline prices fall off a little bit in the next couple of months.  But for now, I would get used to paying around $2.69/gallon on gasoline.  Surprisingly, diesel prices are staying fairly consistent around $2.95/gallon. I still think there is a lot of upside risk in diesel prices going into Q3 and Q4 of this year.  More to come on this in the following months.

Propane prices continue to drop as we unwind the winter delivery season.  Propane production is continuing at record levels and inventories remain over 30% higher this year compared to last year, and demand was stronger!  Propane prices have a chance of breaking away from crude and falling.  I am very confident we will see excellent summer fill rates and contract prices for next season at or below this season’s prices.  More to come in the following months.

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

Best regards,

Jon Crawford