Good morning,

Despite rising production in the US and OPEC+, a lackluster US jobs report, and an absolute disaster in India, traders continue to try and push WTI prices through the psychological and technical barrier of $65/barrier.  If WTI is able to hold gains above $65/barrel, then traders are going to try and go to $70/barrel.  The issue with the continued push higher is that gasoline and diesel retail prices will hold steady above $3/gallon.  Once retail hits these prices, many organizations, producers, and countries take notice.  I am still under the impression that major investment firms took long positions on crude contracts and need to push prices near $70/barrel before they can sell and regroup.  OPEC+ will be meeting again in June and I can’t imagine there will be any barriers to holding back production.  We are starting to see OPEC+ offer discounts on exports as well.  Another issue floating is the Fed interest rate.  Although Treasury Secretary Yellen is saying rates might need to bounce this year to cool things off, the Fed Chair Powell is saying “steady as she goes”.  At this point Powell has not even mentioned reducing the bond buying program.  So as long as we continue on this track, the strength of the dollar will be held down keeping crude prices higher.  But if India continues on their path and the US holds stagnate, eventually demand for crude will overtake the weaker dollar and cause commodities to fall in price.

In local retail news, I was wrong.  I did not expect to see diesel retail prices break $3/gallon, but they have and will continue to hold at this rate.  Gasoline retail prices are also inching closer to $3/gallon as well.  There does seem to be some exuberance in the air unwinding out of COVID and the school year.  We could possibly see the old fashioned run-up on prices to Memorial Day weekend, then sell-off in June.  Only time will tell.

Propane prices are holding firm.  Spot markets are not going any lower at the moment.  With colder weather hanging around, propane inventory building season is off to a slow start.  I am cautiously optimistic that prices will ease, but probably not until July.  I also do not expect next season’s contract pricing to be out until mid-July due to the longer heating season and current future’s pricing economics.

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

Best regards,

Jon Crawford

Good morning,

The markets were fairly quiet and calm this week except for Wednesday.  On Wednesday, the EIA released their weekly inventory report and the drawdown on crude oil inventories was almost 6M barrels.  The report supported the statements from many shale oil producers saying there were going to hold off on pumping crude back into the market too quickly.  In addition, demand for gasoline and diesel fuel outside of jet fuel is starting to return.  Crude prices spiked over $2/gallon this week.  But, OPEC+ is slowly unwinding their cuts and I do think that eventually someone will blink.  China and India are increasing imports at a dramatic rate and all producers want a slice of that pie.  In addition, Iran and the US continue to try and negotiate a new nuclear deal that will allow Iran to export more oil with transparency.  So although we are experiencing this slight uptick in crude price, I don’t see the trend continuing too much higher.

In retail news, gasoline cost continues to go up, and retail prices continue to go down.  Therefore, I expect to see retail gasoline prices jump fast past $2.69/gallon at any moment.  Diesel retail prices have eased a bit, even though cost has increased.  But I don’t see diesel retail prices going over $3/gal anytime soon.

Propane prices continue their slow and cautious moves lower.  The cold snap in April will provide a bit of support for prices, but national inventories are slowly starting to rebuild.  We have a long ways to go to move our national inventory above the five-year average.  Therefore, I still see prices being higher than usual for summer.  I still believe that customers should consider taking delivery of any contract gallons left on account by end of 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,

I hope everyone has a safe and enjoyable Easter weekend.  Nice to see the Brewers start out their season with a come-from-behind win yesterday!  Markets are closed today due to Good Friday.  WTI Crude prices closed for the week above $60/barrel.  Many were surprised, including myself, because yesterday OPEC+ decided to start easing production cuts which usually causes a bit of softening.  But the anticipation of the strong jobs report and the drop in the value of the dollar supported much higher crude prices.  I have a feeling that inflation fears coupled with anticipated stronger demand will hold crude prices steady into summer.  I think we won’t get to a point of seeing potential oversupply in the market until after Fourth of July.  There is a chance that we could experience the backwardation of cheaper prices on the back half of summer.  But I think that would also mean that the fourth wave of COVID-19 in Europe would need to greatly accelerate, which would be bad in general.  For now, keep your wallet out.  Prices at the pump are going to hold.

Gasoline retail prices continue to climb going into spring.  I do not expect to see much relief on gasoline prices in the near term.  Diesel retail prices have eased a bit but stabilized.  I feel that diesel retail prices will hold under $3/gallon for the next couple of weeks.

Propane prices are starting to stabilize.  Retail prices have unwound a little bit, but I do not see any downward pressure on propane prices until national inventory levels start to build.  We are very low on national inventory.  Production is strong so rebuilding can begin in April.  But the rate of rebuild will be watched very closely.  We are not out of the woods yet.  So for now, if you have last season’s contract gallons remaining on your account that expire in April, I recommend that you take delivery of those gallons if you have the storage capacity.

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

Best regards,

Jon Crawford

Good afternoon,

Crude prices have been on a yo-yo ride all week.  The price moves have been dramatic.  The motion is being blamed mostly on the ship stuck in the Suez Canal.  The canal allows the movement of many commodities, including crude oil and refined products.  In addition, so many other goods that were behind on shipment are now even further behind.  Crude oil moved $2/barrel-plus per day back and forth all week!  I have not seen such volatile yo-yo motion in quite some time.  Couple the Suez Canal event with lockdowns in Europe, a stronger dollar, supplies building again in the US, a talk of a carbon tax, decrease in unemployment, a rocket attack in Saudi Arabia, and North Korea firing a couple of ballistic missiles for a cherry on top, and we made for one heck of a week in news for crude oil!  And I’m sure I’m missing even more events.  Honestly, I think traders are trying to figure out if a retreat from $60/barrel WTI is real or not.  I don’t think the swings will calm down until the ship is moved in the canal.  For now, buckle your seat belt and keep your helmet on!

Retail cost of gasoline and diesel experienced extremely volatile moves all week.  In addition to the market news, in production news, Chicago moved the forward price curve on RVP causing the cost of gasoline to jump 10 cents in one day as opposed to going down 7 cents according to the spot market.  Therefore, I do not expect to see retail gasoline prices ease in the coming weeks.  Diesel cost has eased a little and I could see retail prices now holding below $3/gallon.

Propane prices continue to slowly unwind but are holding on tightly until the expiration of the March contract.  I was pleased to see an increase in inventory levels this past week.  I hope the country continues to build inventory going into the summer.  If so, we have a shot at some more attractive summer fill rates.  For now, I am still advising customers to use up their remaining contract gallons by the end of April just to be safe.

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

Best regards,

Jon Crawford

Good morning,

Crude oil prices have dropped for five straight days.  Yesterday WTI crude dropped 7%.  The last time crude prices dropped that much was in September of 2020 and the third wave of COVID was starting in the US.  Crude prices are coming under pressure as the FED manages the US monetary policy.  Bond markets are heating up and some traders are liquidating long crude positions and buying into bonds.  In addition, Europe halted their vaccinations with AstraZeneca and starting lockdowns in various cities.  Crude prices have been very frothy and we have been waiting for something to break the cycle.  Well, the cycle has been broken and now many traders are frantically trying to “talk up” crude to cover short positions.  The correction might be a good buying opportunity for future positions, but I don’t know if the correction is over yet.

In a surprise move, gasoline and diesel retail prices might ease a bit in the coming week due to the drop in cost.  Although margins were slim at these higher prices, I believe you might see some cheaper prices at the pump next week.

Propane prices are continuing to slowly unwind from the back-t0-back short squeezes on the market and the effects from the Texas Deep Freeze.  I do not expect to see propane summer fills below $1/gallon, but we could get close.  For now, if you still have contract gallons remaining on your account, I recommend using them up and waiting to see if prices are down towards the end of August.  Inventories of propane are still 15% below the five year average so we won’t know until at least August if we are out of the woods on supply issues going into next season.

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 everyone safe and well.  The big news of the week was the EIA Inventory Report post Texas restarting and the OPEC+ meeting this morning.  Yesterday, the EIA reported a MASSIVE build in crude oil inventories that gave support to the theory that crude production would come back online faster than refinery capacity.  Given that gasoline and diesel inventories reported MASSIVE draws in inventory, the theory was further supported.  WTI crude prices backed off from recent highs and retreated back below $59/barrel with anticipation for the OPEC+ meeting today.  Many analysts were reporting that Saudi Arabia was planning on removing their “self-imposed” additional production cut of 1M barrel/day and they would support an additional 500k barrel/day increase from other members.  Russia was very adamant that production curbs be lifted due to the market being in balance back in February.  Considering that the US is trying to figure out which rigs to restart from the 50% decimation in 2020, I thought that this meeting would be the “message sender” from Saudi Arabia and Russia showing that they would control the oil recovery in 2021.  That being stated, I figured at least 1.5M/day production increase would have been announced.  Instead, with another surprise that no one really believed would happen, OPEC+ decided to keep all cuts, including “self-imposed” cuts in place until the end of April.  The news sent crude prices on a whipsaw higher.  WTI and Brent crude prices are now officially higher than the peak before COVID started.  I find this optimism in price to be very frothy and reactionary.  Demand is nowhere near it was pre-COVID, and production is all in place to rock-and-roll here in the US starting in 2021.  I believe that speculation is driving the crude trade, and therefore, crude prices are going to be highly volatile for the remainder for the year.  In the meantime, expect energy prices to remain higher through at least April until OPEC+ meets again and decides to possibly increase production.

Retail prices of gasoline and diesel continue to be inching higher.  I would not be surprised to see retail diesel prices at the pump near or over $3/gallon soon, and gasoline retail prices over $2.75/gallon.  Unfortunately, any short-term relief that was possible due to the potential outcomes of events this week has disappeared.

Propane prices are slowly unwinding from the disaster in February.  We are just so fortunate that it’s March and not January.   I do not see the Midwest running out of propane this season.  However, it’s still not time to relax.  The past years have given us very cold Aprils and I would not be surprised to see a colder April this year.  If you watch your own tank, please make sure to check your propane level occasionally in March and April as propane will continue to burn even at these warmer temps.

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

Best regards,

Jon Crawford