Good morning,

Happy Friday!  This week was a shorter trading week with the markets being closed on Monday for holiday.  On Tuesday, the markets decided that recession was closer to reality and WTI crude oil prices collapsed over 10% falling well below $100/barrel for the first time in many months.  As the contagion took hold, many banks started calling “the sky is falling” bottom at $60/barrel, while others said “buckle up” for $200 oil on a head-fake.  On Wednesday, rumors of China looking at lockdowns and poor economic data in Europe sent prices lower once again.  But then on Thursday, the roller-coaster ride left the gate and took WTI crude right back over $100/barrel.  And now, by the end of the week, we might end where we started.  The volatility with the crude oil trade continues to amaze me.  Crude entered into the current “boom-and-bust” period back in 2008 when the US decided to go all-in on crude production.  And over the past 15 years, the cycles of “boom-and-bust” continue to expand in size and frequency.  After the fallout from the war in Ukraine , I am not sure if the crude markets will ever be the same.  By the time we settle out the mess of reorganizing distribution of energy around the globe, new forms of energy production will be online, mostly in China with nuclear energy.  India continues to expand production of alternative energy and all major oil companies are committed to major investments in solar, wind, and hydrogen.  I could see WTI crude prices collapsing back to $60/barrel on a recession, but the potential of a stable and predictable crude oil trade in the coming years seems nearly impossible.  OPEC+ continues to stay strong with a new leader being announced soon.  Barkindo passed away unexpectedly before his term ended this month.  He was considered to be one of the best leaders in OPEC’s history.  So there is a potential that OPEC+ could go through some reorganizing pains.  But Barkindo laid out such a fantastic blueprint for success that OPEC will probably just look to “rinse and repeat” on their current success.

In local markets, gasoline and diesel prices are absolutely a nightmare based on scary supply constraints and refinery maintenance.  One of the major refineries for the Group market is down for at least a month causing over a 40 cent/gallon spike in price compared to Chicago.  In addition, a major refinery in the Chicago market is going to be down most of the month of July into August, and then another one in August/September.  With crude prices swinging wildly higher and lower, finding a true spot market cost on refined products has been near impossible.  The spread on cost within each terminal around the Midwest is the largest I’ve ever seen.  I think July and August could be very tough for price and supply.  Couple the supply issues with increased consumer demand and trucker shortages, and the rest of this summer is looking to be a very difficult situation to manage.

Propane prices eased one last time this week.  I truly believe that propane prices are skipping along the bottom and could bounce higher in a blink of an eye.  Although the corn crop in the Midwest is catching up, supplies of propane are still a bit tight.  If you have not ordered a summer fill, please do so.  We are still at the lowest prices we have seen since last September.  Next heating season contracts are available.  Letters are being mailed out starting this week.  Feel free to call the office to explore your options for locking in the price of propane for next winter.

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

Best regards,

Jon Crawford