Tag Archives: fuel oil

Conway Propane Price Blowout

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Good morning,

I hope this message finds you well.  President Trump was impeached a second time this week and the markets didn’t seem to flinch.  WTI crude prices continue to hold on to gains with renewed hopes that demand will continue to improve going through the year.  IEA kept their forecast for daily crude consumption unchanged which was actually support to current prices.  Now that WTI is holding above the psychological $50/barrel, I believe that more headwinds will need to appear in order to push prices back below $50/barrel.  One of the main supports to higher prices is the potential for another $1.9 trillion dollar coronavirus relief bill proposed by President Elect Joe Biden.  The continued devaluation of the dollar will support crude price futures that are held against the US Dollar.  The US will be in a tricky situation as the economy tries to fully reopen with increased energy costs.  If the new $1.9 trillion dollar package passes we will be in a very tight balancing act.

In local news, gasoline and diesel prices continue to hold.  Retail gasoline prices are above $2/gallon and retail diesel prices are hovering near $2.50/gallon.  I do not expect to see any relief on pump prices in the coming weeks.

Propane is the story of the week.  Due to continued increased demand from China who is having a record cold winter, the US continues to produce record amounts of propane and export at record rates.  Months ago, we were looking at the largest glut of propane supply in history.  Now, inventories have fallen below the five year average and we are still in January.  Speculation and unregulated runs on Conway/Belvieu are somewhat to blame as base prices and indexes have increased over 50 cents/gal since the beginning of September.  This is over a 70% increase in cost of propane in six weeks!  To put this in perspective, that would be retail gasoline going from $2/gallon to $2.85/gallon in six weeks!  If that happened, the news would be talking.  But propane trading and exports continue to go unnoticed and unregulated.  We are allowing suppliers to export our national supply to China and the US consumer is footing the bill.  Suppliers are winning on both fronts.  I have been saying for years, propane is a need based commodity during six months of the year.  The propane export business is new within the last ten years.  Nothing has been done to protect our national supply from being fully exported and leaving the US with supply shortages and record price increases.  I am hoping that we see a price decline to start the first week in February.  If not, propane prices could get ugly.

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

Best regards,

Jon Crawford

Curve Ball From Saudi Arabia And Surging Propane Exports

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Good morning,

I hope this message finds you well.  I think it is safe to say that we are starting off 2021 picking up right where we left off in 2020:  lots of uncertainty, stress, and chaos.  WTI crude prices look to finish the week at an 11 month high due to many factors.  The week started off with OPEC+ meeting and surprisingly a curve ball was thrown by Saudi Arabia to end the meeting.  Everyone except Russia wanted to keep production levels at current levels until March.  Russia wanted to be able to increase production by 500k barrels/day, even though the action might cause a dip in price on the market.  Russia is still upset at the sanctions being placed on them from the US, lead by Sen. Ted Cruz.  Where is Cruz from?  Texas.  What’s in Texas?  Largest shale oil play in America: The Permian Basin.  Russia is willing to run at depressed prices if it keeps the American oil industry from ramping back up.  Saudi Arabia on the other hand has been willing to give up market share in return for higher crude prices, gambling on demand increases coming later in the year.  So on Monday, when the meeting ended with a standstill, many of us thought that Russia might go rogue and prices could fall.  Instead, on Tuesday Saudi Arabia agreed to let Russia increase production, but offered an additional 1M barrel/day cut in production from their own supply!  The move was a total surprise.  Saudi Arabia basically gave the go-ahead to Russia to take their customers.  The move caused WTI prices to surge over 8% and continued to climb throughout the week.  When you couple this move with the issues in America and the continued devaluation of the US Dollar, I’m not seeing a lot of downward pressure on crude prices.  The only wild card hanging is the new COVID variant spreading around.  If the lockdowns across the globe make it to America, we could see a temporary demand shock.  However, President elect Biden has promised 100M vaccinations in the first 100 days and Dr. Fauci seemed to approve the process this week saying it’s very possible based on the plans he has read.  So although there is a chance for some depressed prices in Feb and March, the long term trend on crude prices seem to be higher prices.  In fact, Goldman Sachs revised their guidance to $65/barrel WTI by end of year 2021!  That would be exactly where crude prices were holding before the pandemic started.  The majority are all calling for $55-65/barrel WTI crude throughout the year which is a minimum $5/barrel higher than we are now.  Regardless, it seems that the days of cheaper gasoline and diesel could be short lived in 2021.

Local retail prices have risen due to the increase in cost.  I believe that gasoline prices will continue to hold over $2/gallon and diesel prices could breach $2.50/gallon in the coming weeks without some price relief.

Propane prices have been on an absolute run!  Propane prices have gone up 30 cents/gal in the last 45 days!  Even though we started the year at record level inventories, experienced a lack-luster corn drying season, and we are in a warmer winter than last year, inventories have dropped to lower levels than last year!  The culprit is record exports.  Production is at an all-time high and producers can’t fill ships fast enough to export to the rest of the world.  With WTI prices above $50/barrel, we are thinking that propane exports might start to slow down.  In fact, propane prices might DROP in February and March, in the middle of winter.  But stranger things have happened.  If exports continue at this rate, propane will be a very interesting commodity to watch.  Storage hubs usually trade between 40-55% crude prices.  We have seen 65-85% crude prices these days!  The spread is absolutely bonkers!  We will be watching the markets closely the first three months of the year as the situation continues to play out.

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

Best regards,

Jon Crawford

Happy New Year!

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Enough said! We could talk for hours looking into the rearview mirror on 2020.  And we will probably look into that rearview mirror from time-to-time for the rest of our lives.  But today, I am excited and optimistic for 2021!  Thank you again to everyone for all your patience, support, and understanding as we navigated the most difficult year in our lifetime.  Here’s to a better year in 2021 for the entire world!

Best regards,

Jon Crawford

Merry Christmas and Happy Holidays

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Good morning,

I hope this message finds everyone safe and well heading into the holiday week.  I wanted to take this moment and thank everyone for all their support this past year.  We have navigated many crisis situations over the years, but none quite like a global pandemic.  Your kind messages, gifts to our employees, and nice words on the phone have gone a long way to keep our company motivated and focused throughout these trying times.  I hope you all are able to spend some safe time with family celebrating Christmas, reflecting back on this year, and also looking forward to better times in 2021.

From everyone at Crawford Oil and Propane, Merry Christmas and Happy Holidays!

Best regards,

Jon Crawford

Stimulus and Vaccines

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Good afternoon,

The hopes of passing a new Covid stimulus bill and the roll out of vaccines boosted oil prices this week.  Even though demand in America seems to leveling off as unemployment remains high and consumer spending is dropping, the possibility of more stimulus is dragging down the dollar which causes crude prices to increase.  The addition of Moderna’s vaccine and the rolling out of the vaccine from Pfizer is giving further future support for future oil prices.  WTI crude prices are hovering near $50/barrel and I expect the market to stay inflated until at least year end.  We will wait for January and see if there is any price relief from profit taking on the market.

In local markets, gasoline prices retail climbed above $2/gallon and diesel retail prices are inching closer to $2.50/gallon.  I do not expect to see these prices come down before the end of the year.  There are too many speculative issues holding prices firm.

Propane cost has risen almost 13 cents per gallon in December.  Even though we are experiencing warm temperatures and low corn drying demand, our national inventory levels fell below last year’s levels this week due to record exportation that shows no signs of slowing.  There could be a relief in prices come January if crude prices stay high and temperatures remain warm.  This would cause exportation demand to halt and inventory levels to build quickly.  But for those who contracted this winter, so far you are in good shape.

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

Best regards,

Jon Crawford

Crude At Trading Highest Price Since March 2020

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Good morning,

Happy Friday!  Although unemployment claims rose last week and Congress failed to pass a COVID stimulus bill, crude oil prices climbed to the highest level since March 2020.  Brent crude broke over $50/barrel and WTI held above $45/barrel.  The driver of crude prices seems to be surrounding vaccine distribution, a weakening dollar, and unrest in the Middle East.  There was an attack on a small oil field in Iraq which is cause for concern as Israel has been trying to broker more peace deals in the area.  For now, the optimism of 2021 and the end of the pandemic is outweighing the immediate bearish signals for crude prices.  I have no idea what to expect going into the end of the year.  A part of me feels that as long as the vaccine news remains positive and the distribution continues, crude prices will hold near current levels and possibly move higher in 2021.

In local news, Chicago spot markets experienced a significant move higher on both gasoline and diesel.  I have not been able to discover the culprit, but I’m thinking there is a refinery maintenance issue that popped up somewhere in the Chicagoland refinery market.  I would not be surprised to see gasoline prices hit $2/gal going into Christmas.  However, as quickly as the increase came, it can drop just as much tomorrow.  Stay tuned.

Propane prices continue to hold steady even though the weather is an absolute scorcher of a December and January looks to be an inferno.  Exports of propane continue to be at record levels.  In fact, exports are so high right now that if the propane industry experienced a colder than normal temperature drop, we would see a record depletion of inventory.  One can only be hopeful that if winter ever returns in the next year or so that the pricing for exports becomes less attractive.  I do worry about our level of exports coupled with localized heating demand.  I have no concerns for this winter, but I will be watching close on the developments in 2021.

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

Best regards,

Jon Crawford

Bitter-Sweet December

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Good morning,

I hope everyone had a safe and happy Thanksgiving weekend.  Markets continue to pick up steam as we look to close out this terribly tough and exhausting year in 2020.  The Biden transition is moving along and so far none of the moves are causing too many alarms.  In addition, vaccines and more vaccines are coming out as distribution chains assemble.  Most experts are moving predictions from June to April as the month we will really start to breath relief.  OPEC+ has decided to increase production a bit starting in January, but the move seems somewhat acceptable as the world anticipates reopening.  All of the positive market and COVID news is placing a visible finish line out there for everyone to see.  And the anticipation is leading to excitement.  However, all the news is coming at a cost.  More than 100k Americans are hospitalized across the country for COVID.  That is the most hospitalizations for any disease since the the Spanish Flu.  And many more Americans are going to die.  So as we see the end to the pandemic coming closer and closer, please remember that there is a major human cost still on the horizon and most of that cost will land during the holidays.  I believe the next two months will be extremely difficult and bitter-sweet as we start to plan our lives post COVID while watching thousands of more Americans die.

Please be safe and smart out there.  We have already suffered through almost an entire year of this pandemic and thousands of American families are forever changed.  The finish line is on the horizon and I hope we can come together and finish as safe and strong as possible ready to move forward in 2021.

As always, if you have any questions, please feel free to reach out to us.

Best regards,

Jon Crawford

 

Happy Thanksgiving

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Good morning,

I just wanted to take a moment and wish everyone a safe and happy Thanksgiving.  I know the holidays are going to be very different and difficult for many people.  I am optimistic that better times are coming sooner than later.  We have already experienced so much hardship and change this past year.  I am looking forward to pausing and reflecting back on this year over the next month while preparing for a brighter future in 2021.

I wanted to thank all of you, our customers, for your business this past year.  I never could have imagined 2020 turning out the way it unfolded.  I appreciate all your patience, understanding, and kind words as we navigated and continue to manage the current crisis in our communities and state.

I also wanted to say a big thank you to all our front line workers in health care and essential industries like grocery stores and others.  The bravery and self-sacrifice I have witnessed is truly inspiring and honorable.  Talking with many in the health care and front-line industries gives me hope that as Americans we will come through the other side of this pandemic stronger and hopefully with more compassion towards each other.

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

Best regards,

Jon Crawford

Post Election and COVID Surge Into Winter

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Good morning,

I hope this message finds you well.  As our country and the world is coming to terms with Biden as President-Elect, the markets have been behaving very bullish.  On Monday of this week, Pfizer announced that their vaccine is 90% in efficacy and will be distributed to 50M  Americans by the end of the year.  Dr. Fauci is also confident that the worst of the pandemic will be over by Q2 of next year following his belief that all Americans will have access to vaccines by the end of April 2021.  The news sent all markets on a rocket ship higher.  As the Republicans continue to hold control in the Senate, many believe that President-Elect Biden will not be able to achieve much success in very progressive agendas.  Therefore, many feel that the next four years will be steady with more balance back to the middle instead of a push to far left agendas.  But the vaccine party fizzled as the realty of over 120k+ cases of COVID/day plague our nation.  Markets took a breather to end the week and are starting to accept that although the vaccine news is some welcomed positive news, the next two months are going to be a lot of sickness and a lot of death.  The upcoming holiday season will probably be one of the most painful in our lifetimes.  But for the first time since the pandemic started, we are starting to see light at the end of the tunnel.

In local news, Chicago differentials finally released their grip on cash spot pricing as harvest is coming to an end.  I don’t expect to see much price movement lower at the retail level, but at least the moves higher will likely stop.  I expect to see current retail prices hold through Thanksgiving unless something drastic happens.

Propane prices continue to hold strong even though inventories are robust.  If Wisconsin does not experience cold winter conditions by Christmas, I could see propane prices dropping in January of 2021 just like they did in 2020.  But a lot can happen between now and then.  Regardless, when looking at historical pricing, propane prices are still very low and competitive when comparing to natural gas or oil heat.  So the good news is that no matter what, whether you contracted or are riding the cash market, the heating costs for propane this coming season are a good value.

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

Best regards,

Jon Crawford

COVID Surge in Europe and the US

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Good afternoon,

The surge in coronavirus cases across the US and Europe has triggered quite the selloff in some equities and commodities.  Crude oil prices have tumbled all week and look to finish at the lowest levels since the Q1.  I believe that most hedge funds are looking at the lockdowns in Europe and are worried about demand erosion coupled with increased supplies.  Libya continues to pour out more crude and OPEC does not meet again until January.  At least in January we will hopefully know who the new President is and OPEC will act accordingly.  I believe that prices could be temporarily deflated until after the election.  I do believe that a Biden victory will give a $10/barrel bump on crude prices.  So for now, everyone is on pins and needles waiting for the election and watching the surge of COVID take over Europe and the US.

In local news, we are seeing demand starting to slow up in Wisconsin as COVID-19 rages through the state.  I don’t expect to see any ramp up in gasoline usage going into Thanksgiving weekend unless the recent surge shows a peak very soon.  Gasoline prices will remain under $2/gal for some time and diesel prices are continuing to hold great value.  Any diesel pump prices below $2/gallon at the pump are great value buys.

Propane prices continue to cause head scratching.  National inventories showed a build this past week when demand would be at a high level.  Futures did not react.  In fact, the disconnect between supply/demand economics in propane are leaving many to wonder if algorithm trading has entered the propane futures market?  Maybe a platform like a Robinhood has allowed access into the market, or an ETF is out there trading with propane futures.  Who really knows!  But we do know that the price of propane is very heavy based on supply and demand.  I expect to see a “bust” in prices if temps warm up at all going into the holiday season.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.  Please stay safe and remember to vote.

Best regards,

Jon Crawford