Good morning!

Happy Friday! This week was a roller coaster ride ending on top of the hill where we ended last week. The week started off with many bearish fundamentals. Crude oil demand decreases were being reported globally. The US consumer officially entered the largest default on credit card debt in history. Saudi Arabia announced cuts to their oil price on the open market causing crude oil prices to fall. The US national crude oil inventory prediction reports were all showing major builds in crude oil reserves. But then the roller coaster started. The dollar started to weaken with the belief that rate cuts were still on the table for early 20024. In addition, the SEC approved Bitcoin ETF’s which moved more money out of the US dollar. But the inventory report on Wednesday showed a less than stellar build in crude oil inventories. And then on Thursday inflation data released displayed indications that inflation is not slowing at the pace traders were hedging. Then, the Houthis took control of an Iranian crude oil tanker that was once seized by the US due to sanctions on Iran. And then, out of nowhere last night, the UK and the US announced air strikes directly on Houthi targets in Yemen. The provocation pushed the Houthis to announce that a larger retaliation is now on the table. In solidarity with the Houthis, the Iran-backed rebels in Iraq heavily bombed the US Embassy in Iraq. Russia increased their bombing in Ukraine. And Israel showed no signs of negation or stopping their war in Gaza. To start the week, WTI crude oil prices were moving back towards $70/barrel. And by the end of the week, $75/barrel was in sight. This week, the bulls took over the market with “risk-on” back in the crude oil trade. I believe the geopolitical issues in the Middle East are going to continue to escalate and $80/barrel WTI crude price is the next target. Even though production is high and demand is weakening, there are so many possibilities of catastrophe. The possibilities include an attack on Saudi Aramco storage or production, shutting down the Straight of Hormuz, putting a hold on all trade ships in the Red Sea, and the complete leveling of the US Embassy in Iraq. All of the current events seem to answer the question that the US is willing to enter into a third war. There is a Presidential election this year and I do believe that all three of these wars will be the number one priority. These wars also piggy-back on border security. I was absolutely dumbfounded by the events last night in Yemen. We can not afford another war. And this third war could lead to massive increases in cost of energy for the American people. Unfortunately, I am not very hopeful going into the weekend. In fact, I am somewhat saddened that more people are going to die from the current situation, including Americans. At this time, we must hope that nothing leads to full-out escalation and invasion in the Middle East.

In local news, a supplier/buyer was extremely short in the Chicago market for the month of January and placed massive buys of gasoline and diesel causing the price of both gasoline and diesel to jump 20 cents/gallon. Therefore, the blowout in differentials in Chicago fundamentals along with the increased price in crude oil will move retail prices at the pump higher. The prices are coming at the worst time as the consumer is running tight on free cash flow.

Propane prices jumped over 10 cents/gallon this week due to increased demand and the price of crude oil climbing higher. Retail prices moved higher as well. I expect that with extreme cold coming, propane prices have room to run even higher. Unfortunately, all energy commodity prices increased this week due to the geopolitical risks around the glove. Also, with the record snowfall this week, a friendly reminder to all of our customers to please keep your driveway clean and a clear path to your tank. Our drivers are extremely busy and with your help our drivers will be able to make more deliveries safely and efficiently each day.

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

Best regards,

Jon Crawfords