Happy Holidays From Everyone At Crawford Oil And Propane!

Good morning!

I wanted to take a quick moment and wish everyone a safe and enjoyable holiday celebration this weekend!  I know that the recent snowstorm and arctic blast has caused many problems for travel and families getting together.  I hope that everyone is able to find a way to be with family at some point in the next three days and celebrate with laughter and fun!

Although prices have increased this week, the trading volume has been very low.  So as always, the trends of oil prices the last two weeks of the year are very misleading.  I will provide more details on crude, refined products, and propane after New Year’s celebration.

I truly wish everyone safe travels and a happy holiday celebration this weekend!

Best regards,

Jon Crawford

Crude Prices In Tug Of War

Good morning!

Happy Friday! We had a lot of news this week that affected crude prices.  We started the week with the results of Covid Zero ending in China.  Turns out the results are causing quite the amount of chaos in their healthcare departments and everyone in the country is not happy about the move.  In addition, China’s economic data release was very poor based on expectations.  China is definitely not in a spot yet where the opening of business and moving forward looks like the United States.  Europe and England continued to announce rates hikes from their central banks as inflation continues to soar and recession starts to set in.  In the US, the CPI print was less than expected by 0.1% and everyone jumped out of their seats for joy!  Clearly, the markets are holding on to any sign of inflation easing in the US.  The details of the results were not that great.  Food, fuel, and shelter expenses continued to push higher and I would not be surprised to see a correction in the number next month.  The markets went nuts thinking we are heading into great times again.  WTI crude prices soared above $75/barrel.  WTI prices became further supported on the shutdown of the Keystone Pipeline due to a fairly substantial leak.  But then the FED poured some cold water on the rally.  The FED announced a 0.5% rate hike which is exactly what the markets expected.  However, the guidance after the release explained that the FED will continue to raise at smaller rates until inflation breaks and then will hold rates for up to a year before starting to cut.  So we might be stuck in high interest rates for all of 2023 and maybe even into 2024.  We might not see 2% FED rates until possibly end of 2024 or first half of 2025.  And then the EIA released the national inventory numbers and the results were bearish.  Crude supplies built by 10M barrels, gasoline built by 4.5M barrels, and distillates built by 1.2M barrels.  The reality that the US and the globe are currently experiencing or heading into a pullback and/or a probably recession started to set in by the end of the week.  Crude prices pulled back on the indigestion of all the aforementioned news.  Then Keystone announced a partial reopening of the pipeline putting more downward pressure on crude prices.  WTI crude price is looking to settle below $75/barrel this week.  Clearly volatility is our friend going into the end of the year, and I think will be hanging around with us for most of 2023.

Gasoline and diesel retail prices are moving all over the board.  With the high volatility this week, retail prices were all over the map.  Diesel cost went up over 40 cents/gal this week, and gasoline prices went down a touch.  The volatile price changes are causing major headaches for retailers.  Figuring out how to retail price your product is like throwing darts at a board.  Hopefully some calm and steady price moves settle out into the holidays and retailers can catch a breath.  In regards to diesel, with sub-zero temps coming next week, please make sure that the diesel you are buying for your truck, especially if it parks outside, is blended properly for operation.  We are recommending a 70/30 blend with #1 for optimum usability and performance.  We also treat our fuel all year long to combat moisture in tanks which is usually the first culprit for problems such as filters getting plugged.  Please clarify with your fuel supplier or gas station what process is being taken to ensure you have the best operable experience this winter.  Yes, we know that blended fuel is higher in cost.  But the suppliers are pinning us with over $1.00 per gallon spread for the cost of #1 diesel.  Because diesel refining is tight, suppliers are taking advantage of the necessary but the lower volume purchasing of #1 diesel.

Propane continues to stay steady and strong.  Production is absolutely robust and running out of propane in the country is off the table for the year.  However, that does not mean that we will have logistical nightmares if there is a polar vortex or extended periods of cold weather.  Train car delivery is still not reliable and already causing some issues around the state.  Delays in delivery are the biggest culprit.  The pipelines seem to be in decent shape and operating at a good capacity.  But the pipelines have not been tested with a prolonged cold snap just yet.  We are expecting to see propane prices rise into the end of the year and through January and February.  If March stays cold, we could see prices peak and then start start to unwind through April.  However, April has been a surprise in the past years bringing sometimes colder weather than March!  For now, we are just getting started on the propane delivery season.  Please remember to keep your driveway clear and have a safe path to your propane tank to ensure a safe and efficient delivery.  Also, if you are a will-call customer, please make sure to call us when you get down to 30-35% so we have plenty of time to schedule your delivery.

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

Best regards,

Jon Crawford

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