Crude Finding Support, Prices Rising

Good morning,

Not too much to report this week.  WTI crude prices have risen this week to nearly $30/barrel.  There is much optimism on the continued cuts from OPEC and the US.  In addition to the cuts, China’s crude demand is ticking back up as the country is reopening.  The traders are also hopeful that US demand will continue to rebound from the lows in March and April as states begin to reopen.  The FED is also calling for more stimulus which always raises commodity prices.  I feel that the current WTI price recovery is too fast.  Although there are some bullish headlines out there, the supply balance in the US is still on the bearish side.  I’m not hopeful that WTI will break out much beyond $30/barrel.  If for some reason WTI does break much above $30/barrel, we will see rig counts increase and another price collapse.  I still think we are six to twelve months away from complete supply re-balance in the marketplace.

In local retail news, prices of gasoline and diesel continue to rise.  I do not expect to see pump prices go down anytime soon.  I would count on gas prices above $1.50/gallon throughout the summer at this point in time.

Propane prices also continue to rise.  The supply economics of propane continue to be bullish.  By no means is the propane supply situation looking like an emergency, but the world of overabundance in supply are behind us.  I highly recommend filling your tank and contracting for next season when the contracts become available.

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

Best regards,

Jon Crawford

Crude Rally – Pump Prices Rise

Good morning,

WTI prices gained more than 40% on hopes of the world economies reopening and demand potentially soaring back with a vengeance.  WTI settled this week near $24/barrel.  In addition, the builds in US inventories were not as large as expected.  Production seems to finally be dropping.  However, in my opinion, the rally back seems to be a bit over-bought.  Inventory levels are still high and the world supply is still robust.  Unless there are more stories of magical cures hitting the market this month, there is a potential for another massive sell-off on the WTI contract this month.  Saudi Arabia did cut a bunch of tanker shipments, but at the same time, there are not many tankers left to fill!  So for now, WTI will probably hang around these levels and move in volatile swings until the end of the month.

In local retail news, gasoline retail prices continue to rise.  The glut of supply in Chicago is gone.  Gasoline and diesel costs have risen over 50 cents/gallon these past weeks.  I expect average retail prices of $1.69/gallon gasoline and $1.79/gallon diesel fuel to continue into next week.

Propane prices continue to rise as I have been writing the past weeks.  Propane seems to have bottomed in mid-March and not looked back.  We are suggesting that everyone fill their tanks now if possible.  Production cuts are adding to the supply worries in propane.  Contracts for next season will be coming out probably in June sometime.  Stay tuned.

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

Best regards,

Jon Crawford