Covid Relief Package And Trade Issues With China
Good morning,
Crude prices started the week out strong with Trump announcing continued pressure on China trying to force the sale of the app TikTok. The action is renewing skepticism that the US and China will not be able to reconcile their trade differences in the near term. In addition, as COVID-19 continues to spread, Congress and Trump have still not passed a relief package as the previous relief package expired. Many Americans are finally starting to get back to work, but with the majority of schools going virtual in the fall, without some sort of financial package to help families with the cost of keeping kids home, many are worried our economy will start to decline again. Although the oil industry is starting to recover and the strength of the dollar is weaker, the continued China trade and COVID issues are putting downward pressure on crude. I still expect WTI prices to hold near $40/barrel until a COVID relief package is passed.
In local news, retail prices on gasoline and diesel continue to climb. I expect to see gasoline retail prices at or above $2/gallon and diesel retail prices will be over $2/gallon. As the futures trading months are moving more into harvest months, diesel prices are gaining some momentum with increased demand forecast.
Propane prices continue to follow crude. If you have not filled your tank this summer, please do so. The retail value of summer fill pricing has very high value for the consumer. I expect our retail prices to climb 10+ cents/gallon going into September. I also recommend contracting your propane usage for the upcoming heating season. I am reading reports of a colder winter this year and with all the instability in the marketplace, I think that the safety of locking in your pricing is very attractive.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford
Slight Pullback On Price
Good morning,
Crude prices have retreated from the highs of last week. Economic data in the US was not very strong this week. Unemployment remains high with additional jobless claims filed. The FED is looking at holding rates very low. The earnings from most companies, other than Big Tech, were awful in Q2. The coronavirus is spreading to more states as it weakens in others. Most states are going to stricter mandates and fears of economic slowdown are back on the table. In addition, the ability for schools to safely open in person across the country is looking like it will be very limited. The US inventories of crude oil experienced quite a draw this week, but many believe it was a correction from last weeks report. Around the world, Europe is possibly looking at a second wave of the coronavirus. But the continued hopes of treatments and the race for vaccines are keeping markets steady. So for now, $40/barrel on WTI seems to be the floor. Next week will be a possible directional test and prediction for crude prices in August. More info to come.
In local news, Chicago pricing differentials fell on the August contract expiration. Gasoline retail prices have fallen back below $2/gallon and diesel retail are near $2/gallon. Given the fundamentals in Chicago and crude bouncing along at $40/barrel, I don’t expect to see much movement on retail prices in the coming week.
Propane prices are still at very good value and we highly recommend that everyone fill their propane tanks now. We also recommend writing a contract for the 2020-2021 heating season. Contract prices are lower than last year and summer fill pricing is very attractive. Please call our office today for more info.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford