Prices Continuing to Climb

Good afternoon,

Prices of crude oil continued their path higher this week settling at the highest close in the last three months.  We expect to see crude prices continue to climb as Saudi Arabia is cutting more than expected in volume, supply disruptions continue around the world, and sanctions on oil exports from Venezuela and Iran are hitting the marketplace.  In addition, China and US are entering a trade negotiation deadline that is starting to look hopeful.  Demand around the world appears to be healthy and OPEC seems set on keeping prices higher.  The economy does not seem to be slowing as much as expected in the US and China and overall sentiment seems to be bullish on crude prices.  I am seeing healthy prices through Q2 2019, but am on the fence from there.  Supply is very delicate and could easily slip into surplus at any moment.  But for now, emotions and sentiment are going to push crude along on its current path.

Retail prices for gasoline and diesel continue to be all over the map.  Many areas in the state are selling retail gasoline below cost.  The next couple of weeks will be interesting to watch as the marketplace continues to digest higher gasoline costs and reluctance to increase retail prices on the street.  Diesel cost is continuing to rise as well and $3.00/gallon street price is not far away.

Propane prices are also starting to rise with crude.  Although propane inventories are healthy and production is at record levels, cost continues to follow the crude market.  I just don’t see propane breaking from crude at this point in the year with a couple of winter months remaining.

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

Best regards,

Jon Crawford

Crude Prices Stable – Pump Prices Climbing

Good afternoon,

Finally nice to have more normal winter temperatures again!  I hope everyone is staying safe with the crazy snow and ice storms.

Crude prices continue to trade in a narrow range based on the day’s news.  One day the economy looks great, the next day it looks awful.  In other words, whatever, hits the headlines in the morning drives the price for the day.  Crude production is very stable worldwide.  Even though sanctions on Venezuela are looking to hit the market soon, many countries have already vowed to continue to buy from Iran, so the potential for a drop in world production is limited.  My main concern is diesel production and prices in the US.  With sanctions against Citgo, we are putting a lot of pressure on other countries for importing heavy crude that is best refined for diesel.  The US does not produce any heavy crude.  In addition, our diesel inventory levels are below the 5 year average.  So going into high demand seasons, if we continue to limit diesel production, we are going to see our cost of diesel rise quickly.

In local retail news, the retail price of gasoline has now moved above $2/gallon and climbing.  Diesel retail prices are starting to move closer to the $3/gallon mark.  I expect to see retail prices continue to rise over the coming weeks as costs have increased dramatically over the past three weeks.

Propane prices have remained stable.  Although demand has been very strong, production numbers are robust.  There is just not a lot of fear for inventory loss in propane for the remainder of the year.  Please remember to keep your driveway clean and have a clear path to your propane tank in order to receive your delivery safely and efficiently.

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

Best regards,

Jonathan Crawford – Pres.