Crude Prices Trading in Narrow Range

Good morning,

Crude prices traded in a very narrow range this week.  Supplies are ample and demand is healthy in the largest economies, but the virus variants and targeted lockdowns in various countries are keeping any major price runup in check.  On the downside, a potential deal with the US and Iran is back on the table which would throw the crude markets into supply surplus.  The beginning of talks is putting downward pressure on crude prices, but not too much pressure as the negotiations with Iran are usually quite volatile and unpredictable.  For now, WTI crude price seems to be in a holding pattern around $59/barrel.  Jobless claims were a bit higher than expected and small business closures are climbing which is keeping American demand in check.  However, vaccinations are flowing at a record pace and a fourth wave seems like it will be targeted areas as opposed to widespread.  The crude market continues to be in a push-pull relationship with many economic issues, but the range of the swing has become much more narrow.

In local retail news, gasoline prices have eased a little from recent highs, but not much.  I don’t see gasoline retail prices falling below $2.49/gallon anytime soon based on current market conditions.  Diesel cost has also balanced out which will keep retail prices from breaching $3/gallon which is good for farming, construction, and shipping this spring.

Propane prices continue to slowly unwind but not as fast as some would like.  I am not expecting very cheap summer fill prices below $1.  I also know that next season’s heating contracts will be priced higher than this year.  I highly recommend that customers take delivery of any remaining contract gallons on their account.  If propane prices start to drop dramatically, I don’t see that possibly happening until at least August.  Stay tuned for more info as we wind down the heating season and approach allocation building season.

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

Best regards,

Jon Crawford

WTI Crude Price Holding Above $60/Barrel

Good morning,

I hope everyone has a safe and enjoyable Easter weekend.  Nice to see the Brewers start out their season with a come-from-behind win yesterday!  Markets are closed today due to Good Friday.  WTI Crude prices closed for the week above $60/barrel.  Many were surprised, including myself, because yesterday OPEC+ decided to start easing production cuts which usually causes a bit of softening.  But the anticipation of the strong jobs report and the drop in the value of the dollar supported much higher crude prices.  I have a feeling that inflation fears coupled with anticipated stronger demand will hold crude prices steady into summer.  I think we won’t get to a point of seeing potential oversupply in the market until after Fourth of July.  There is a chance that we could experience the backwardation of cheaper prices on the back half of summer.  But I think that would also mean that the fourth wave of COVID-19 in Europe would need to greatly accelerate, which would be bad in general.  For now, keep your wallet out.  Prices at the pump are going to hold.

Gasoline retail prices continue to climb going into spring.  I do not expect to see much relief on gasoline prices in the near term.  Diesel retail prices have eased a bit but stabilized.  I feel that diesel retail prices will hold under $3/gallon for the next couple of weeks.

Propane prices are starting to stabilize.  Retail prices have unwound a little bit, but I do not see any downward pressure on propane prices until national inventory levels start to build.  We are very low on national inventory.  Production is strong so rebuilding can begin in April.  But the rate of rebuild will be watched very closely.  We are not out of the woods yet.  So for now, if you have last season’s contract gallons remaining on your account that expire in April, I recommend that you take delivery of those gallons if you have the storage capacity.

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

Best regards,

Jon Crawford