Good morning,

Happy Friday!  Well, we experienced one of the most volatile trading weeks in the crude oil trade since 2008.  Crude oil prices traded in a $25 range for the entire week!  One day this week, WTI crude oil traded as high as $15/barrel on the spot higher, and then dropped as much as $18/barrel!…during the same day!…  The volatility is causing disruptions in locking down future supply price.  The chaos of the trade in turn makes pricing spot products much like throwing darts at a dart board.  The news affecting the crude oil trade this week included many developing stories.  Russia is trying to meddle with the Iran nuclear deal causing panic that the deal will go sour.  Iran is saying that Russia’s desires in the deal are not in Iran’s best interest, but we have yet to see the final draft.  The US also reached out to Venezuela to inquire about lifting crude sanctions on imports to the US.  The US has banned all crude from Venezuela since 2018.  Russia and Ukraine held a peace talk in Hungry that went south causing markets to shoot higher.  But then they announced today that a potential peace deal could be on the table.  The announcement today is quieting the crude market a bit.  The IEA (International Energy Agency) also announced that 60M barrels of strategic crude reserves is not enough and they are prepared to do more.  (I have been saying that for weeks….)  UAE and Saudi Arabia are also testing the market waters by SAYING they MIGHT pump more oil just to see how the market reacts.  The power of their words has much influence on the market.  In the past they will SAY that they are CONSIDERING a crude oil production increase just to see the market reaction.  Then they gauge their future actions based on the market response.  The US continues to be strong on crude production and by the end of the week, WTI crude is carving out around $109/barrel and trading a bit more narrow.  I hope that the crude oil trade is finding a range with the the new world environment.  Although prices are higher, having stability in the trade allows futures pricing to be more predictable, which in turn allows spot pricing of the day be more accurate.  I am still optimistic that fuel prices will be much lower by Memorial Day.

In local news, gas and diesel spot pricing traded at rates I’ve never experienced.  I can tell you that your local gas station is not gouging the public.  One major cost of selling fuel that has not been discussed is credit card fees.  Credit card companies receive a percentage of a total sale and make up over 80% of all fuel purchased at gas stations.  As fuel cost DOUBLED in price, so did credit card fees.  There were some days the past two weeks that the credit card companies were making more than a store owner on the sale of a gallon of gasoline!  And…since Visa/MC abandoned business in Russia, Visa/MC announced an INCREASE to American credit card fees starting next month!  Many believe that higher retail fuel prices equal higher profit margins for gas station owners.  The opposite usual occurs.  Gas station owners earn much less, and sometimes lose money in volatile bull market runs on refined product costs.  Please do not take your anger and frustration out on gas station owners or cashiers.  They are truly doing their best and so many variables are out of their control right now.

Propane prices thankfully have remained quite stable the past week.  Propane hasn’t experienced much of the extreme volatility as crude oil, gasoline, and diesel did last week.  For now, we are recommending all propane customers to use up the remainder of their available contract gallons and wait until summer for hopefully better prices.  Also, if you are a will-call customer, don’t forget to keep an eye on your tank level!  March and April can play tricks with warmer days and cooler nights!  Running out of propane likes to sneak up on will-call customers during March and April.  🙂

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

Best regards,

Jon Crawford

Good morning,

Well, the unthinkable has happened.  Putin has decided to launch a full-scale invasion on Ukraine.  When rockets starting flying Wednesday night, crude prices soared over $8/barrel.  By the end of the next trading day, crude prices closed LOWER than the high of the week prior!  And then on Friday, crude prices traded lower to prices not seen in two weeks.  As I have been writing for weeks, the US and the world can not continue to recover their economies at these high energy prices.  Biden and many other crude countries announced that strategic petroleum reserves are on the table to keep prices in check.  The announcement caused traders to take pause.  And in other news this week, the US and Iran both believe the finish line to a nuclear deal could be signed next week.  In addition to lifting sanctions on Iranian crude exports, Iran is willing to do a prisoner exchange which has not been done in many years.   The world is preparing to lower oil prices in order to prevent Russia from profiting on their act of war.  If the Iran deal is cut next week, and the world comes together on strategic reserve releases, Saudi Arabia UAE will be forced to increase production in order to compete for market share.  Couple all of this with the FED raising rates, and high oil prices could go into the rearview mirror.  If prices do indeed fall and world producers increase next month, I expect to see sanctions start on Russian energy and SWIFT banking.  Sanctions on Russian energy would cut Russia off at the knees.  The next few months are going to be some of the most historical  months to watch playout in terms of war, energy, and economic recovery.  At least the pandemic seems to be ending which will be one major issue off our backs going into the spring.

In local news, gasoline and diesel retail prices will probably hold at current rates.  The jump in cost did not occur as expected from the Russian invasion but the situation is very dynamic and can change in a minute.

Propane prices have remained stable but supply chains have been choppy at best.  Rail shipment delays coupled with a pipeline shutdown for repair have caused headaches in Wisconsin.  Thankfully the worst of winter is behind us and we should get through this just fine.  Even though the major cold is behind us, snow and ice are still issues for the coming months.  Please make sure to keep your driveway plowed and salted 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

Good afternoon,

I hope this message finds you all well.  After throwing in the towel two weeks ago, crude oil prices are now struggling to find direction.  The past week was an absolute head scratcher of price movements.  Prices started the week soaring higher, as expected, with Russian forces building on the border in the Ukraine.  But then Russia pulled a head-fake and said they would pullback some troops and negotiate some more.  Upon the news, crude prices tanked.  Although WTI did not fall below $90/barrel, most of the gains last week were wiped out.  But the next day, the US and NATO claimed that Russia added more troops instead of pulling back, so up the prices went again!  As we prepared for the “March to $100 Crude”, prices then collapsed out of nowhere.  In a surprise announcement, the US and Iran are close to cutting a new Nuclear Deal.  The deal would lift all crude oil exporting sanctions on Iran.  The additional crude oil into the market would fill the deficit that formed due to OPEC’s inability to bring their exports back online as fast as promised.

In addition to geopolitical and crude production problems, data was released showing inflation over 9% and consumer confidence dropping.  By Friday morning, WTI crude prices fell below $90/barrel for the first time in two weeks, even as Russia and Ukraine are on the brink of war.  I have not seen such erratic behavior in the crude market for a long time.  Usually when the market goes this erratic, we are approaching the next leg in movement.  If the Iran deal gets done and Russia doesn’t invade Ukraine, I’m not sure we will see $100 crude oil.  The volume of contracts changing hands right now is incredible.  The panic is showing that banks, traders, and producers, don’t know what to do.  But one thing we know for certain.  Putin does not like the US Oil industry.  And the US has been adding oil rigs back to the market at an incredible rate the past two weeks.  The US also delivered the most LNG and gasoline/diesel exports to Europe over the past two months in our nation’s history.  We are showing Putin that our country can compete on the world oil stage.  Although nationally, crude supplies and refined products showed a small deficit this week, most of the deficit is going to exports.  The demand in the US is starting to flatline a bit as inflation takes hold.  Most consumers are trying to go back to service based spend instead of goods.  But these high energy prices are causing some pause.  The FED is rumored to now raise interest rates an entire 1% to try and put a lid on inflation.  Even with seven or eight rate increases, we will not experience deflation for months.  However, crude prices could fall lower much faster than deflation and really help release a pressure relief valve on the economy.  Wow, that was a lot to unpack, but it’s been a wild week!

In local news, Chicago is VERY long on gasoline coming out of winter.  We should see gasoline retail prices hold at the current rate.  As warmer weather is returning, diesel winter blends are starting to subside which makes the cost lower.  I also expect to see diesel retail prices hold.  If we peak at current retail prices, we have a chance to really ramp up for a strong summer with driving demand.

Propane prices have actually gone up in the past week due to massive exports and increased demand.  In addition, colder weather is predicted for the first two weeks of March.  Although I’m not predicting any major causes for concern, suppliers and producers are using every trick they can to squeeze the last bit of profit from retailers before winter demand ends and summer inventory building season begins.

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

Best regards,

Jon Crawford

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

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

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