WTI Back Above $40/Barrel

Good morning,

The crude oil market continues to ride a narrow wave between $38-41/barrel.  As I have been discussing, the price movement is completely driven by headlines and not always based on supply/demand economics.  Prices continued their downward trend below $40/barrel until late Tuesday when vaccine announcements were made along with a very bullish prediction on the weekly EIA Inventory report.  Crude prices jumped back up above $40/barrel.  On Wednesday, the EIA Inventory report was confirmed and major banks released their earnings showing strong profits.  However, the rally was quieted as OPEC+ decided to relax production quotas starting in August until the end of the year.  The main economic driver for crude has been gasoline demand in the US.  As the coronavirus cases continue to surge, if economies slow down and more crude enters the market, a balance from surplus crude will be broken quickly causing prices to severely drop.  In addition, China’s economic data was not very strong and American unemployment filings were over 1M again.  I believe we are going to experience a very narrow range on the crude trade for the next few months.

Gasoline and diesel retail prices have not changed from last week.  The average retail price on both gasoline and diesel is around $2.05-2.19/gallon depending the market. I do not expect to see much if any movement on retail prices.

Propane prices have been following the crude market fairly closely.  I continue to write that all customers should fill up now while prices are cheap.  We also released our contract pricing for next heating season and the prices are fantastic.  I also recommend that all customers contract for the upcoming heating season.

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

Best regards,

Jon Crawford

Crude Prices Retreat From Highs

Good morning,

Crude oil prices are retreating from recent highs earlier this week.  WTI surpassed and held above $40/barrel coming out of strong gasoline demand over the 4th of July weekend.  However, sentiments are getting a little negative due to the growing community spread of the coronavirus.  Some States are clamping back down and many are worried that another economic slowdown is in the future.  Crude prices have relaxed back to last week’s levels below $40/barrel.  As I have been writing for some time, I do not see any long-term scenario for WTI crude prices to hold above $40/barrel until better treatments or vaccines are available.  Also, there are grumblings that Saudi Arabia might not extend production cuts due to lack of compliance on quotas from other OPEC nations.  The crude oil market looks like it got just a little ahead of itself.  However, unless we truly start shutting down the economy again, I don’t think we will see crude prices fall too much.

Gasoline and diesel retail prices have varied throughout the area.  The average retail price for both gasoline and diesel is above $2/gallon.  I’ve seen some markets falling back below $2/gallon on gasoline.  Gasoline and diesel costs, when including all taxes, have remained relatively the same.

Propane prices have continued to stay steady.  Not much movement up or down in price.  Contract pricing for next winter has been released.  Please contact the office for more info.  We are highly recommending that everyone contract for the coming heating season and orders a summer fill.  We have no idea what to expect with the coronavirus over the fall and winter.  So far the propane supply issue seems to be of not much concern anymore.  In addition, the corn crop is growing quickly and ahead of schedule.  We are not anticipating a large corn drying season.  Also, many around Wisconsin say, “for every day above 90 degrees in the summer, it’s a day below zero in the coming winter.”  If that’s the case, bundle up because 2020-2021 winter will be cold!  🙂

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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