Well, that didn’t take long! WTI Crude price climbed back above $50/barrel this week and looks to close above for the week. Signs of progress on the China/US trade war seem to be coming to fruition. In addition, economic data in the US seems to be better than expected with retail sales strong and jobs hiring on the rise since December. Furthermore, Saudi Arabia cut more than expected in crude production for December and announced that they are willing to shed market share to increase prices. Saudi Arabia also floated the possibility again of an IPO for Aramco in 2020. The announcement is meant to give support to their position of wanting higher crude prices. Back at home, the FED is starting to take a softer position on rate increases for 2019 which caused the stock market to climb along with energy prices. So for now, the bottom on WTI seems to have been carved out at around $45/barrel. There are still some bearish scenarios floating around the marketplace. China’s economy is murky at best. True data is hard to find so time will tell if the economic giant is truly in troubled waters. The US production of crude has soared past 12M barrels/day. With OPEC cuts and healthy demand, the production levels in the US are not a damper on prices. But if China truly is slowing down or something changes in the US economy, crude prices could tumble back down quickly. In other words, volatility is going to be the name of the game for crude in 2019. Major banks are changing their forecasts on crude prices every other week by as much as $10/barrel swings. In other words, nobody knows. It’s a big guessing game this year. My advice, buy some upside price protection if possible at these current values.
In local retail news, prices of gasoline are starting to climb. We have seen cost increases come to both gasoline and diesel. In fact, diesel is set to rise almost 20 cents/gallon at any moment! Our Chicago market spot prices are well below the rest of the markets East of Rockies. It’s not a matter of “if”, but “when”. My advice for those larger diesel customers is to fill up your tanks now and keep them full.
Propane prices are also starting to climb again with the rise of crude prices, but not as fast. We need to see some cold weather push demand to over 2M barrels/day consumption for propane prices to really rally. For now, prices are good and supplies are ample. As a reminder, please make sure your driveway is plowed and sanded/salted if needed. And also to be sure there is a clear path to your propane tank to ensure a safe and efficient delivery.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Jon Crawford – Pres.
Thank you to everyone for a safe and wonderful 2018! I hope everyone enjoyed their New Year celebration and is looking forward to 2019!
Fuel prices are starting to carve out a bottom. Stocks and crude are starting to trade at normal volumes. There is not too much to report at this time. Oil prices are starting to cautiously rise but more predictions will come next week. OPEC is looking like they are sticking to their proposed cuts. The dollar is losing strength. Global economic acceleration is in question. Trade wars are in discussion. And demand strength is debatable. All great topics that will be better covered next week. So hang tight.
For now, enjoy some cheap gasoline and diesel prices at the pump! The Chicago SPOT market which sets cost in our area is WAY oversupplied in the moment. I would expect to see gasoline prices jump about 5 cents in the next couple weeks, and diesel is ripe for nearly a 20 cent+ price jump in the coming weeks! More to come!
Propane retail prices are stable and supplies are good. The warm weather is keeping demand in check. But the cold is coming. It’s just a matter of time. Please make sure that your driveways are plowed and there is a safe path to your propane tanks to ensure driver safety and efficient delivery.
Thank you again for a great year in 2018 and if you have any questions, comments, or concerns, please feel free to give us a call.
Jon Crawford – Pres.