Stimulus and Vaccines

Good afternoon,

The hopes of passing a new Covid stimulus bill and the roll out of vaccines boosted oil prices this week.  Even though demand in America seems to leveling off as unemployment remains high and consumer spending is dropping, the possibility of more stimulus is dragging down the dollar which causes crude prices to increase.  The addition of Moderna’s vaccine and the rolling out of the vaccine from Pfizer is giving further future support for future oil prices.  WTI crude prices are hovering near $50/barrel and I expect the market to stay inflated until at least year end.  We will wait for January and see if there is any price relief from profit taking on the market.

In local markets, gasoline prices retail climbed above $2/gallon and diesel retail prices are inching closer to $2.50/gallon.  I do not expect to see these prices come down before the end of the year.  There are too many speculative issues holding prices firm.

Propane cost has risen almost 13 cents per gallon in December.  Even though we are experiencing warm temperatures and low corn drying demand, our national inventory levels fell below last year’s levels this week due to record exportation that shows no signs of slowing.  There could be a relief in prices come January if crude prices stay high and temperatures remain warm.  This would cause exportation demand to halt and inventory levels to build quickly.  But for those who contracted this winter, so far you are in good shape.

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

Best regards,

Jon Crawford

Crude At Trading Highest Price Since March 2020

Good morning,

Happy Friday!  Although unemployment claims rose last week and Congress failed to pass a COVID stimulus bill, crude oil prices climbed to the highest level since March 2020.  Brent crude broke over $50/barrel and WTI held above $45/barrel.  The driver of crude prices seems to be surrounding vaccine distribution, a weakening dollar, and unrest in the Middle East.  There was an attack on a small oil field in Iraq which is cause for concern as Israel has been trying to broker more peace deals in the area.  For now, the optimism of 2021 and the end of the pandemic is outweighing the immediate bearish signals for crude prices.  I have no idea what to expect going into the end of the year.  A part of me feels that as long as the vaccine news remains positive and the distribution continues, crude prices will hold near current levels and possibly move higher in 2021.

In local news, Chicago spot markets experienced a significant move higher on both gasoline and diesel.  I have not been able to discover the culprit, but I’m thinking there is a refinery maintenance issue that popped up somewhere in the Chicagoland refinery market.  I would not be surprised to see gasoline prices hit $2/gal going into Christmas.  However, as quickly as the increase came, it can drop just as much tomorrow.  Stay tuned.

Propane prices continue to hold steady even though the weather is an absolute scorcher of a December and January looks to be an inferno.  Exports of propane continue to be at record levels.  In fact, exports are so high right now that if the propane industry experienced a colder than normal temperature drop, we would see a record depletion of inventory.  One can only be hopeful that if winter ever returns in the next year or so that the pricing for exports becomes less attractive.  I do worry about our level of exports coupled with localized heating demand.  I have no concerns for this winter, but I will be watching close on the developments in 2021.

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

Best regards,

Jon Crawford