Tag Archives: fox lake

Ending Where We Started

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Good morning!

Happy Friday!  Well, crude oil prices ended the week where they started on Monday.  The markets are trading all over the place and trying to make sense of all the chaos.  From the Ukraine conflict, to potential tight crude oil supplies, to OPEC trying to ramp up production, to figuring out what the FED is going to do, to inflation running wild… things are just a mess…  At least for now, WTI crude price seems to have found a footing around $90/barrel.  I hope that we can hold around this price because any further upward movement is really going to hurt the economy and demand.  I did some math this week on how crude prices are affecting the American economy.  Based on current gasoline and diesel consumption in the US, every time the national average retail price at the pump goes up 1 penny, $5M/day of consumer cash is sucked out of our spending economy. Since Jan 1st of this year, combined prices now average 20 cents higher into February. That’s $100M/day more than last month!  If we keep up at this rate, our economy will pullback.  Our consumer based goods economy for the past two years is JUST starting to transition back to service based.  And these higher energy prices from gasoline to natural gas are putting an absolute heavy cloud on the service based economy returning.  The next few months will be vital for how we recover coming out of full pandemic.  I believe that energy cost is in the top three of most important issues affecting Americans right now.  Our American economy can not recover or continue at these current energy prices.

In local news, gasoline prices jumped over $3.20/gallon and don’t look to be going down.  Diesel retail prices are moving past $3.50/gal and I don’t see any downward pressure on the horizon.  For now, your wallet will be much lighter every time you pull into a gas station.

Propane prices have stabilized going into the end of winter.  Supply chain logistics are improving, especially with the remainder of winter prediction looking warmer than normal.  We will probably have a few colder snaps here and there, but it’s looking like the worst of winter could be behind us.  But don’t relax too much, because winter has been extending into April for most recent years.  The temps might not be super cold, but I don’t count out snow in mid-March or even beginning of April!  For now, please make sure your driveway is plowed and there is a clear path to your propane tank to ensure a safe and efficient delivery during these busy times.

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

Best regards,

Jon Crawford

 

Throwing In The Towel

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Good morning,

Happy Friday.  Well, I have decided to throw in the towel.  The market is convinced that $100 crude has to happen based on a multitude of “what-if’s”.  Traders were able to finally break the resistance level of $90/barrel WTI crude this week.  The momentum and euphoria of seeing $100 has gripped most traders.  I believe now that there is nothing to stop the inevitable.  I am throwing in the towel and accepting a reality that is not based on complete truth.  Because as we know, the markets are irrational and emotional.  And right now, we are seeing irrationality and hubris on full display.  I do not deny the risk factors of a Russian invasion on Ukraine or Middle East tensions.  But the amount of risk premium put into the market is at a level I have not seen since 2014.  If we really want to see the economy slow down, run triple-digit crude prices for a month or so.  And just like in 2014 and 2008 when crude prices soared above $100/barrel, the fall from crude oil highs was fast and dramatic.  We hope now that the FED acts quickly and swiftly to put a stop to the runaway inflation.  And, we are also hoping that OPEC+ takes the gloves off of production quotas next month.  For now, we need to accept that the path is now carved forward and out of our hands.  Pain will come to our pocket books at just the wrong time.  Everyone was so looking forward to a reprieve after the current Omicron surge, but unfortunately we will be faced with extremely high energy costs sucking millions of dollars per day from the free-spending economy.  Eventually, the build up in savings from last year will start to diminish, and potentially severe economic problems will start to surface.

In local retail news, I expect to see diesel retail prices soar over $3.50/gallon and gasoline retail prices break $3.20/gallon.  The situation is not fun so please be kind to cashiers at gas stations.  The high prices are not their fault.  Everyone is trying to do their best.  🙂

Propane prices have bounced much higher due to disruptions on rail deliveries to the United States as well as some pipeline issues.  There are no major supply issues, just logistics.  There are train cars sitting in rail yards all over the state, and suppliers are at the mercy of the railroad to prioritize the delivery of the propane cars.  The situation is very tricky and we continue to work with the state to try and develop a way to better place necessary priority on propane rail car deliveries.  The pipeline issue is based on potential damage that is being repaired.  Our main storage cavern in Conway, KS is sitting on excellent inventories based on the five-year average.  I expect propane prices to remain higher in the month of February due to lingering logistical issues as well as soaring crude oil prices.  As a reminder, please remember to keep your driveway plowed and a clear path to your propane tank to ensure a safe and efficient delivery.

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

Best regards,

Jon Crawford

Russia Head Fake?

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Good afternoon,

After a wild ride the past weeks watching stocks sell off and crude oil prices gain momentum higher, the possibility of a Russia head fake is on the table.  As I have been writing, the downside risk to a Russian invasion of Ukraine is greater than the potential upside gains.  Russia is using the situation as an opportunity to claim relevancy in the East as well as the ability to influence Western policies.  Russia certainly got everyone’s attention and many took the bait hook, line, and sinker.  I just do not see a full scale invasion happening.  Today, there are glimmers of hope for some diplomacy and negotiations.  WTI price has finally taken a breather on the news after breaking through $87/barrel.  There is a lot of selling pressure setup at $90/barrel.  In my opinion, major banks are talking $100/barrel as much as possible to try and push prices through the $90/barrel ceiling.  There is so much crude oil production coming online in the next few months from the US and OPEC.  Even if the Ukraine situation relaxes, we are not out of the woods.  I believe prices will relax maybe only $10/barrel because there is still not a lot of spare crude production capacity available at this moment.  Any unforeseeable supply disruptions could cause some headaches for the time being.  But once spare capacity is on the table, I believe prices could fall another $10/barrel.  So I am still on the side of believing higher prices are with us for the foreseeable future and probably into Q2.  But once we get into Q2, all bets are off!  For now, take some antacids, grab your popcorn, and continue watching the show!

In local retail news, gasoline prices are starting to inch higher again.  Gasoline costs are primed for retail prices to stay above $3/gallon for quite some time.  Diesel retail prices are all over the map.  Some retail prices are being sold at cost, some much higher depending on winter blending.  I expect diesel retail prices to hold near $3.49/gal.

Propane prices have gone up over the past week as rail issues and pipeline breakdowns have caused supplies to get backed up.  Allocations are in place at many terminals and rail shipments are hoping to arrive first part of February.  Although the recent price increase from supply could be temporary, I expect prices to remain elevated in February as demand should continue to remain strong.  Please make sure to keep your driveway plowed and a clear path to your tank in order to ensure a safe and efficient delivery of propane.

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

Best regards,

Jon Crawford

Starting To Peak???

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Good morning!

I hope this message finds you safe and warm.  Winter is upon us!  Crude prices hit their highest level since 2014.  The geopolitical events in the Middle East along with Russia/Ukraine are adding some risk-premium to the bullish sentiments around crude oil supply.  In addition, OPEC has been unable to fully produce their quotas the past two months.  However, supplies look to surpass quotas moving forward and the US crude oil production is in full swing.  I expect to see crude supply move to surplus by Q2 of this year.  In addition, interest rates are probably going to increase sooner than later.  The faster interest rates rise, the cheaper crude will be to purchase on the open market.  So one can hope that has interest rates go up, crude prices will come down.  Crude prices ended the week off of highs based on supply forecasting and the strength of the dollar.  And China CUT interest rates at a time when most are raising!  These actions all are giving pause to this unreliable recent rally in crude prices.  However, the market is on pins and needles right now, so any further events that are interpreted as bullish could try and push WTI crude price to $100/barrel!  It’s truly mindboggling when you take a 20,000 foot view.  Part of me is seeing the market behave in a “pump and dump” scenario.  Banks and hedge funds are pumping the price up to dump it before full supply/demand economics take over.  I also saw that Goldman Sachs reported a Q4 loss and they are VERY long on crude oil hedge contracts.  As I’ve been writing, it’s time to get your popcorn and sit back!

In local retail news, I expect to see gasoline retail prices hold at or above $3/gallon for some time yet.  And I would also expect to see diesel retail prices near $3.50/gal.  Hopefully we start to see prices ease by Memorial Day this year.

Propane demand has been very strong with cold temperatures.  Supplies have remained steady and prices relatively stable.  Fingers crossed, and we could be going into a calm February for the first time in a few years.  If the crude markets play out as anticipated, I am seeing lower prices for propane next year.  In addition, China is canceling shipments of propane due to high prices which will help build national inventories putting downside pressure on future pricing.  As a reminder, please make sure your driveway is plowed and there is a clear path to your propane tank to ensure a safe and efficient delivery.

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

Best regards,

Jon Crawford

Russia and the Inflationary Wildfire

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Good morning,

I hope this message finds everyone well.  WTI Crude prices broke higher through $80/barrel as inflation data continues to run wild.  The market seems to be shrugging off any mention of the FED raising rates until something happens.  We seem to be stuck in a “I’ll believe it when I see it” attitude towards the FED.  Until inflation starts to cool, I’m afraid that energy prices are going to remain high.  Although true supply/demand economics are pointing towards surplus supply in the first half of the year, for now inflation has the market.  I believe the FED will need to act hard in order to put any stop to the rising prices.  At this point, I don’t think a quarter-percent rate increase will even move the needle.  In addition to our inflation troubles at home, the US and Russia are stalled in talks discussing a potential Russian invasion of Ukraine.  Both sides are keeping tensions high and coupling the tension with potential supply disruptions in the Ukraine if an invasion happens.  The geopolitical issues are baking “risk premiums” into the price of crude as well.  So, in order for crude prices to pop and drop, I think we need to see swift and hard action from the FED and the tensions in Ukraine dissipate.  Until then, I unfortunately see prices staying high and slowly climbing higher.

In local news, retail prices for gasoline and diesel slowly crept higher last week.  I expect to see those prices hold and even slowly move higher with the price of crude.

Propane prices are trading in a narrow range as producers and suppliers argue over the potential heating demand for the remainder of winter versus the price of crude oil.  Propane rail shipments have been a disaster as weather and COVID brought shipments to a halt at the start of the year.  Train cars are moving again and I think we will be in better shape by end of next week.  For now, supplies are a little wonky in Wisconsin but we should all be ok.  As a reminder, please make sure your driveway is plowed and there is a clear path to your propane tank to ensure a safe and efficient delivery.

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

Best regards,

Jon Crawford

Speculation Is Driving The Bus

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Good morning!

Happy cold Friday!  WTI crude oil prices pushed up through $80/barrel briefly today before retreating on a terrible December jobs report.  There is a push/pull relationship going on in the crude oil trade right now.  The facts are that the FED is going to raise interest rates, OPEC+ is continuing on path to increase production, the US is going to increase oil production, Omicron is causing a ton of uncertainty, and Libya is facing some hurdles with pipelines being shut down.  On the speculation side of the trade, many are believing that inflation is going to still outpace any increase in interest rates in 2022.  Others believe that the push to “green” energy is forcing oil companies to raise prices as they diminish investments in crude exploration.  And even more traders are believing there is going to be a supply shock to the system in 2022.  I have watched many economic scenarios play out since the Great Recession.  Although I have never watched a world pandemic play out, many of the pieces are still the same.  The trade on crude oil is being caught up in news headlines and heavy speculation based on long-term bet positioning.  I am not betting on $100 WTI crude prices, especially in a key election year.  I believe that many oil companies have slashed “exploration budgets” because they were over-levered to begin with.  Developing deep-water wells is much more expensive and dangerous than maximizing crude oil harvesting on land.  I also don’t believe that jet fuel consumption is ever going back to pre-pandemic levels.  World business has forever changed.  Companies are experiencing the savings of not needing everything to be in person all the time.  Travel for work is never going to be at the same level.  I also know that many in OPEC invested billions in crude exporting equipment and will need a return on investment.  I see too many hands trying to get in the cookie car by mid-year 2022.  I think the “hype” of the trade will keep prices higher in Q1 and Q2.  But I think crude prices are ripe for a correction going into the second half of the year.  Even if Omicron becomes that last major variant in the pandemic, I don’t see where demand is going to outstrip supply that is coming online throughout the year.  Patience and cooler heads are going to win this year on the crude oil trade.

In local news, retail prices for gasoline and diesel are slowing climbing higher again.  I expect to see these prices hold and possibly go higher in the coming week.  Also, with the extreme cold, many stations have blended their diesel fuel with more winter components so I expect retail diesel prices to move higher.

Propane prices have leveled off as we move into the heart of winter.  Although demand will skyrocket back in the coming weeks, supplies are in better shape.  However, any Polar Vortex lasting longer than five days will strain the system and push prices higher faster.  For now, please make sure to keep an eye on your tank if you are a will-call customer and call in at a minimum of 25%.  We are very busy and we want to make sure we can efficiently and safely take care of all our customers.

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

Best regards,

Jon Crawford

HERE’S TO 2022!!!

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Good morning!

I wanted to take a quick moment and thank everyone again for their support through a difficult year in 2021.  I am optimistic for 2022 and hopefully you are too!  Although crude oil prices are ending the year at almost all-time highs for 2021, I am seeing headwinds on the horizon.  I do not believe we will be at these prices come this time next year.  The US is locked-and-loaded to increase production right out of the gate starting in 2022.  There are economic headwinds starting the year in China.  And OPEC’s relationship with Russia will be put to the test as Russia flexes its’ muscle on the geopolitical world stage.  Overall, demand for jet fuel will increase, but demand for crude has been steady.  Consumers had plenty of money in their pockets to keep the demand train moving forward the past year.  As COVID-19 becomes less dominant in the news, the amount of demand increase will not be the shock that many are predicting.  The only increase could be in jet fuel, but even jet fuel will not bounce back to pre-COVID times as many businesses have permanently pivoted to more efficient models of operation.  As propane continues to be a highly exported commodity in the US, unless crude prices tumble below $50/barrel, I don’t see propane retail prices going under $1/gallon anytime soon.  Propane price as a percentage to crude will probably continue to operate in average to higher-than-average ranges until production starts to really overtake exports again.  So until then, propane retail prices will probably remain in the 10-15 year averages of over $1/gal but under $2/gal.  Although we all enjoy propane prices under $1/gal, the averages predicted are still good value in today’s economy.

But just as COVID-19 was unpredictable, commodity prices are nearly impossible to predict.  My 20k foot prediction for commodity prices in 2022 is based on as much current information and historical data I can synthesize.  Regardless of what crude prices do in 2022, I hope that COVID-19 moves toward the rearview mirror and we start to look forward to more peace and calm in our daily lives.

Thank you again for your business in 2021 and we look forward to providing you with more guidance and great customer service in 2022.  Happy New Year!

Best regards,

Jon Crawford

Merry Christmas and Happy New Year!

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Good morning!

I just wanted to take a quick moment and wish everyone a safe and enjoyable time with family and friends over the coming week.  Thank you so much to all our customers for their loyalty and patience through a tough year in 2021.  Hopefully 2022 brings some much needed relief to everyone.  Merry Christmas and a Happy New Year!

Best regards,

Jon Crawford

It’s a Pogo Stick For Christmas!

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Good morning!

I hope this message finds everyone safe and well.  I didn’t know that I asked for a pogo stick this Christmas, but that’s what I got!  🙂  Crude prices continue to bounce up and down the past week.  WTI jumped back up over $70/barrel due to most traders shrugging off omicron as a threat to the economy.  Well, then this week omicron is looking to spread like wildfire, some countries are putting in economic shutdowns and slowdowns, and the FED announced a faster-to-market rate increase next year.  WTI prices peaked at about $75/barrel this week but are now looking to close near $70/barrel.  The bullish factors playing on crude prices are Russia/Ukraine relations, OPEC+ and their production quotas, and COVID-19 treatments hitting the market along with omicron being less in severity of disease.  Only time over the next few weeks will flush out these bullish potentials.  For now, I eating Christmas cookies while I ride my new pogo stick on crude prices into the end of 2021!

Local retail prices on gasoline and diesel have stabilized and I don’t see much movement going into the year end.  I believe most consumers in Wisconsin will pay under $3/gallon on gasoline and near $3.25/gallon on diesel until the new year.

Propane prices have also found a floor and stabilized as we enter the depths of winter.  Cold winter is being predicted from here on out.  In fact, our winter is mirroring 2017 which had two polar vortexes in the first quarter of the new year!  So don’t let your guard down with this recent warm snap!  I think propane prices will start to recover and go higher in the first part of the new year as supply chains and logistics could get occasionally dodgy with cold snaps.  As a reminder, please make sure to keep your driveway salted and a clear path to your propane tank to ensure an efficient and safe delivery this winter!

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

Best regards,

Jon Crawford

Crude Confusion For Christmas?

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Good morning!

Happy Friday!  WTI crude prices shot up through $70/barrel on the hype of continued increased world demand.  In addition, Saudi Arabia announced price increases for shipments starting in January.  However, the news also gives further support to the continued increased production from the US and OPEC+ going into 2022.  The FED continues to push for rate increases in 2022 and inflation data is off the charts!  I am still sitting on the sidelines waiting for the end of the year to pass.  Markets can behave irrationally, and I am seeing some irrationality taking hold into year end.  Besides the current economic facts surrounding crude oil, I am watching some of the smartest people sell their stocks.  Elon Musk, Jeff Bezos, and Chamath Palihapitiya are all clearing positions going into the the year end.  If a market correction happens, crude prices will sink as well.  I can also see world oil supply going into surplus in Q1 of 2022.  Therefore, in the meantime I am keeping Pepto-Bismol handy and hoping for some entry positions on futures buying to open up the first part of next year.

In local news, gasoline and diesel retail prices have stabilized.  There was a quick sell-off on pricing in the market, but Chicago quickly recovered due to some refinery issues in Toledo, OH.  As crude prices recovered, we are now stable in the market at current retail prices.

Propane prices have stabilized as well with crude oil, but I think propane is oversold.  Propane prices coupled with crude oil on the news of warmer weather.  Yes, propane supplies are getting better, but any sort of cold snap is prime for a whip-saw higher on propane prices.  Propane price has been de-coupled from crude price all year, so am skeptical on the current congruent movement.  For now, customer that didn’t contract at higher prices are getting a little relief, but I don’t see propane prices holding at current levels long-term.  There is too much winter left in the season.  As a reminder, please make sure your driveway is plowed and salted if necessary, and there is a clear path to your tank to receive your propane delivery.  The snow will be here before we know it!

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

Best regards,

Jon Crawford