Crude Oil Prices: The Wild Ride Continues

Good morning!

Happy Friday!  Colder weather is starting to set in and there was even some snow/mix this morning.  Hard to believe that winter is almost here!  Anyways, crude prices took a wild bumpy ride again this week.  The COP26 concluded this week with not much changed except a wanting to get off of fossil fuels.  However, the conference sparked backlash from Saudi Arabia and others.  The US and other nations have called for the ending of fossil fuel production, yet demanded Saudi Arabia and others in OPEC to pump more oil to bring prices down.  Saudi Arabia responded by saying that since the world wants less fossil fuels, they might pump less fuel and allow the world to experience the pain of high prices.  Saudi Arabia believes the world is not ready for a full transition to alternative energy and they are not going to be bossed around, especially from the US, as we continue to withhold our own oil production from the market.  In addition, Saudi Arabia raised their prices for December and January shipments just to prove a point.  Then, inflationary data for the US came out at the highest in 30 years and the API reported draws in national crude oil inventory.  By Wednesday, crude oil prices were touching on the highest prices for the year.  On Wednesday, the EIA instead showed a build in crude oil inventory and the Biden administration, along with the FED, decided that maybe it’s time to do something about inflation.  The coupled news sent the Dollar much higher and crude prices tanking.  In addition to the bearish sentiments, COVID seems to be coming back for one last major stand in the US and Europe, and China started cutting crude imports due to higher prices.  At one point, WTI dipped below $80/barrel again after being at $85/barrel earlier in the week!  As I’ve been writing, the crude trade is going to be wild going into the end of the year and whether or not traders are going to ring the register on a 70% gain for the year.

In local news, gasoline and diesel prices have remained fairly steady as the market continues to go back and forth every day.  There is not really a directional movement carved out.  I’m expected to see prices remain around the same for the coming week.

Propane prices have continued to stay in check.  As winter approaches and winter price indexes hit the market, I don’t expect too much movement on price for the time being.  We have not moved price at retail for almost a month and I welcome the news considering prices went up over 50 cents/gal since July!  So now we just need to wait and see how hard mother nature hits us this winter.  I am cautiously optimistic going into the winter.  If the FED raises rates sooner and we get a leg-down movement in crude prices, propane prices could stay in check.

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

Best regards,

Jon Crawford

Don’t Get Sick On The Roller Coaster Ride

Happy Friday!  Wow! Crude oil prices took a wild roller coaster ride this week.  Prices started the week out soaring back near highs of $85/barrel on WTI.  Then the US announced increases in national inventory coupled with the news that the FED will begin tapering and possibly raise interest rates in early summer of 2022.  The news sent crude oil on a nose dive over two days of trading, closing at $79/barrel on Thursday!  The closing price was the lowest in weeks.  In the middle of all the news, OPEC+ had another meeting and decided to keep oil production steady, regardless of calls from the US to increase production.  I figured the news would have shot prices higher, but it fell on deaf ears…until this morning.  The October jobs report was knocked out of the park based on expectations, so the news coupled with OPEC’s announcement from yesterday shot WTI right back above $80/barrel.  Looks like WTI is still going to close down for the week, but not nearly as much as anticipated.  As I have been writing, we are in uncharted volatile territory with many players holding the crude oil trade.  The next four to six months are going to be very choppy.  Try not to get sick on this roller coaster ride!

In local news, the cost of diesel has finally eased a bit with harvest on the backend.  Gasoline cost has eased a bit but not as much as diesel.  I expect to see retail prices basically unchanged as the markets are still balancing into the supplies being sold at retail.

Propane price has continued to hold steady through this choppy trade, but that is ok.  The wild ride higher seems to be kept in check at these numbers.  As I have been writing, we are not out of the woods, but more on a pause.  I still could see propane having some break out higher sessions depending on the amount of cold weather this winter.

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

Best regards,

Jon Crawford