Tag Archives: lodi

Slight Pullback On Price

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Good morning,

Crude prices have retreated from the highs of last week.  Economic data in the US was not very strong this week.  Unemployment remains high with additional jobless claims filed.  The FED is looking at holding rates very low.  The earnings from most companies, other than Big Tech, were awful in Q2.  The coronavirus is spreading to more states as it weakens in others.  Most states are going to stricter mandates and fears of economic slowdown are back on the table.  In addition, the ability for schools to safely open in person across the country is looking like it will be very limited.  The US inventories of crude oil experienced quite a draw this week, but many believe it was a correction from last weeks report.  Around the world, Europe is possibly looking at a second wave of the coronavirus.  But the continued hopes of treatments and the race for vaccines are keeping markets steady.  So for now, $40/barrel on WTI seems to be the floor.  Next week will be a possible directional test and prediction for crude prices in August.  More info to come.

In local news, Chicago pricing differentials fell on the August contract expiration.  Gasoline retail prices have fallen back below $2/gallon and diesel retail are near $2/gallon.  Given the fundamentals in Chicago and crude bouncing along at $40/barrel, I don’t expect to see much movement on retail prices in the coming week.

Propane prices are still at very good value and we highly recommend that everyone fill their propane tanks now.  We also recommend writing a contract for the 2020-2021 heating season.  Contract prices are lower than last year and summer fill pricing is very attractive.  Please call our office today for more info.

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

Best regards,

Jon Crawford

China and the Surge of Coronavirus in the US

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Good morning!

I hope everyone had a great week.  This week was another crazy ride on the commodities train.  We started out the week with crude selling off on the continued surge in spread of the coronavirus in the US.  But then announcements of breakthroughs in treatments and vaccine development stopped the selling and moved crude into buying territory on the hopes of recovery.  Crude prices gained further support as President Trump gave his first coronavirus press briefing in months and asked for Americans to wear a mask because the pandemic is going to get worse before it gets better.  Now, we would think that crude prices would drop on such news, but because the President was acknowledging the seriousness of the situation and asking Americans to change behavior to stop the spread, the news actually supported crude prices because hopefully the announcement will help the situation improve.  I know….crazy times….  In addition to the coronavirus, the US and other countries continued to pull out of Hong Kong in retaliation to the new laws put in place by China.  And then, the US announced that we would be closing the Chinese consulate in Houston due to reports of Chinese espionage.  The consulate had until end of day yesterday to evacuate and was seen burning items all day on Wednesday.  China retaliated by kicking the US out of one of our consulates in China.  And just to turn it up one more notch, Taiwan announced that they are afraid of a military strike by China since most of the world and superpowers are distracted with coronavirus.  Wow…that’s a lot to handle right there!  On the supply/demand front, the US inventories experienced a slight build this week showing that the surge in coronavirus is starting to hurt demand a bit.  The week is ending with crude prices near where we started for the week.  If the US/China relations continue to deteriorate, crude prices are in limbo.  Will demand destruction or devaluation of the dollar be the ultimate price driver on top of the pandemic?  Only time will tell….

In local news, Chicago supplies took a differential jump this week and cost for gas and diesel jumped almost 10 cents/gallon.  I believe the price jump is in regards to the futures contract month expiring and looking to fall harvest with high demand.  I expect to see gas and diesel retail prices hold near $2/gallon for the next week.

Propane prices are gaining some support with crude price movement.  However, propane supplies seem to be in much better shape and corn drying demand is looking very weak for the fall.  The increase in supplies will give us a cushion for a cold winter.  I am predicting a colder winter than normal due to the high heat over 90 degrees we have experienced this summer.  A general rule to follow is “a day over 90 degrees in the summer, is a day below 0 in the winter.”  If that holds true, we are looking at a much colder than normal winter.  I strongly suggest filling your tank now while the prices are low and contracting propane for the coming heating season.

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

Best regards,

Jon Crawford

WTI Back Above $40/Barrel

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Good morning,

The crude oil market continues to ride a narrow wave between $38-41/barrel.  As I have been discussing, the price movement is completely driven by headlines and not always based on supply/demand economics.  Prices continued their downward trend below $40/barrel until late Tuesday when vaccine announcements were made along with a very bullish prediction on the weekly EIA Inventory report.  Crude prices jumped back up above $40/barrel.  On Wednesday, the EIA Inventory report was confirmed and major banks released their earnings showing strong profits.  However, the rally was quieted as OPEC+ decided to relax production quotas starting in August until the end of the year.  The main economic driver for crude has been gasoline demand in the US.  As the coronavirus cases continue to surge, if economies slow down and more crude enters the market, a balance from surplus crude will be broken quickly causing prices to severely drop.  In addition, China’s economic data was not very strong and American unemployment filings were over 1M again.  I believe we are going to experience a very narrow range on the crude trade for the next few months.

Gasoline and diesel retail prices have not changed from last week.  The average retail price on both gasoline and diesel is around $2.05-2.19/gallon depending the market. I do not expect to see much if any movement on retail prices.

Propane prices have been following the crude market fairly closely.  I continue to write that all customers should fill up now while prices are cheap.  We also released our contract pricing for next heating season and the prices are fantastic.  I also recommend that all customers contract for the upcoming heating season.

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

Best regards,

Jon Crawford

Crude Prices Retreat From Highs

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Good morning,

Crude oil prices are retreating from recent highs earlier this week.  WTI surpassed and held above $40/barrel coming out of strong gasoline demand over the 4th of July weekend.  However, sentiments are getting a little negative due to the growing community spread of the coronavirus.  Some States are clamping back down and many are worried that another economic slowdown is in the future.  Crude prices have relaxed back to last week’s levels below $40/barrel.  As I have been writing for some time, I do not see any long-term scenario for WTI crude prices to hold above $40/barrel until better treatments or vaccines are available.  Also, there are grumblings that Saudi Arabia might not extend production cuts due to lack of compliance on quotas from other OPEC nations.  The crude oil market looks like it got just a little ahead of itself.  However, unless we truly start shutting down the economy again, I don’t think we will see crude prices fall too much.

Gasoline and diesel retail prices have varied throughout the area.  The average retail price for both gasoline and diesel is above $2/gallon.  I’ve seen some markets falling back below $2/gallon on gasoline.  Gasoline and diesel costs, when including all taxes, have remained relatively the same.

Propane prices have continued to stay steady.  Not much movement up or down in price.  Contract pricing for next winter has been released.  Please contact the office for more info.  We are highly recommending that everyone contract for the coming heating season and orders a summer fill.  We have no idea what to expect with the coronavirus over the fall and winter.  So far the propane supply issue seems to be of not much concern anymore.  In addition, the corn crop is growing quickly and ahead of schedule.  We are not anticipating a large corn drying season.  Also, many around Wisconsin say, “for every day above 90 degrees in the summer, it’s a day below zero in the coming winter.”  If that’s the case, bundle up because 2020-2021 winter will be cold!  🙂

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

Best regards,

Jon Crawford

Happy 4th of July

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Good morning!

Instead of my usual update, I just want to take a moment and wish everyone a safe and enjoyable 4th of July weekend.  I know the last three months have been difficult for many people.  I hope we can all take a break for a couple days and enjoy the beautiful weather.  I know that our country will survive through all of the current turmoil and I hope we all come out stronger in the end.  Our nation has a history of resilience and determination.  We can all come together and be better in the end.

I will just say quick, that next season’s propane heating contracts are released and will be hitting mailboxes next week.  If you would like more information, please call our office and we will be happy to assist you with writing a contract.

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

Best regards,

Jon Crawford

 

COVID-19 Surging Takes The Headlines

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Good morning,

Although the US economic data looks to be improving a bit and the unemployment rate looks to be bottoming, the surging of COVID-19 in Texas, Arizona, California, and Florida have rocked the markets this week.  WTI Crude has come off of recent highs and is very skittish in trades due to the possibility of economic downturn from the surging coronavirus.  Across the globe, many countries are continuing to slowly reopen without the major resurgence as the US is experiencing.  Time will tell if the coronavirus rages back up in Europe as well.  But for now, the US is a cautionary tale to the rest of the world.  Supply and demand for crude oil seem to be somewhat in balance for the time being, but any major cutback in current demand will rapidly build surplus supplies in the US.  In addition, shale producers are saying they will need three years to peak at 16% of top level production levels experienced in February of 2020!  That is a terrible outlook for oil in the US.  We are now officially operating the LOWEST number of oil rigs in the country since the 1980’s.  Also, shale companies are looking at $300 billion in losses this year and that will put pressure on banks that are just now starting to experience some financial stress due to the pandemic.  The next three months will be very crucial in determining how we end 2020 and look to 2021.

In local news, demand for gasoline and diesel continues to remain steady.  Retail prices are dropping back down closer to $2/gallon on both gasoline and diesel.  If there is no peak in COVID-19 cases in the South by the end of next week, we will be looking at the lowest retail prices for gasoline and diesel on the 4th of July in almost 20 years.

Propane prices have stabilized due to high capacity production.  I do not believe that propane will continue at the current production runs.  Exports are starting to slow down as well.  Contracts for this coming heating season will be released very soon and will be cheaper than last season.  Stay tuned for more info.

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

Best regards,

Jon Crawford

WTI Crude North of $40/Barrel?.. Will It Last?..

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Good morning!

There is not much news to report this week.  Crude oil prices continue to follow the news cycle.  We started out the week with prices dropping based on fears of a second wave with the coronavirus.  But prices recovered as more news of potential treatments for COVID-19 were released and the EIA reported draws in US refined product inventory.  OPEC+ seem to be holding strong on their production quotas and the US is not ramping up production quickly as crude prices slowly recover.  The combination of everything that happened this week is leaving investors with an appetite for more.  So as we close the week, WTI Crude oil topped $40/barrel for the first time since the beginning of March!  But will this recent rally last?  I’m not so sure.  The economy is still slow with another 1M people filing for unemployment this past week.  I believe we are hanging on by a thread and any resurgence of the coronavirus in previous hot-spots forcing any sort of shutdowns will squash this rally.  For now, all trajectory is on the heels of any coronavirus news.

In local retail news, gasoline and diesel retail prices have climbed above $2/gallon in most areas.  Due to the 10% rise in crude prices, retail prices have followed accordingly.  I expect to see retail prices for both gasoline and diesel to remain above $2/gallon.

Propane prices have held steady and climbed a bit the past week.  I continue to be bullish on propane.  Although inventory levels are OK right now, any hiccups in production could put us into deficit very quickly with all of our export capacity running strong.  In addition, if we have a cold winter, demand could put pressure on our production facilities, which at the moment are making NO contract commitments for retailers this coming winter.  As always, propane will be interesting.  I recommend that everyone fill their tank now and contract for next heating season.  We expect next heating season contracts to be out in July.

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

Best regards,

Jon Crawford

 

Crude Sell-Off After Peak

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Good morning,

WTI crude futures started off today sinking nearly 10% after peaking at $40/barrel.  The peak pricing came on the heals of OPEC+ agreeing to keep record production cuts in place through July.  But Wednesday was a battering of bearish news for crude.  EIA Inventory Reported showed a large build in crude inventories which came as a surprise.  With rig counts being down to the lowest level in 20 years last week, many are wondering if production is still outpacing demand.  Then the FED released their statement saying they will keep interest rates near zero through 2022 because the economy is going to take a much longer time to recover.  In addition, new waves of the coronavirus are popping up in the US sparking fears of a major second wave across the country.  And finally this morning, unemployment numbers showed an additional 1.5M people applied for benefits last week.  Although the unemployment number showed a slowing of claims, claims have still not stopped which gives concerns on the long-term sustainability of the economy as it stands.  But the real head scratcher was the FED statement.  If the FED keeps rates near 0%, the action devalues the dollar, which increases the price of crude because it’s traded based on the dollar.  But the FED’s announcement caused crude prices to drop.  I have never seen that before.  But we are living in strange times and the market is behaving likewise.  I believed that the crude market was a bit over-bought so I am not surprised at the recent profit taking.  But I do not believe we will see prices fall down below $30/barrel anytime soon.

In local retail news, gasoline pump prices breached $2/gallon in some areas.  Diesel retail prices have have barely held on below $2/gallon.  I expect to see gasoline and diesel prices hover near the $2/gallon mark for some time as retail businesses continue to deal with decreased summer demand.

Propane prices have continued to remain strong.  I continue to be bullish on propane.  Although supplies are in better shape than they were a month ago, the volatility in crude and the unknown commitments from Canada and local US producers leave many wild cards on the table.  I believe now is the time to fill your propane tank.  I also urge everyone to lock in their next season’s prices.  Our contracts will be available around the 4th of July.  Stay tuned for more info.

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

Best regards,

Jon Crawford

OPEC Meeting and the Global Economy

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Good afternoon,

So the crude oil rally has taken a pause.  The OPEC meeting was not moved up a week because not all members are holding up their end of the deal.  The lack of full compliance is putting Russia more on the side of not extending the deep cuts.  The US has cut production, but not as much as other would like to see.  However, the economies around the globe are reopening and an appetite for crude is starting to return.  Gasoline demand in the US is returning as people move around for the summer.  Even with great unrest and instability in the nation surrounding the George Floyd protests and the coronavirus, the crude market and stock market continue to move higher.  I’m not so sure that Russia doesn’t pull out of the deal next week and take at least $5-7/barrel on crude price with them.  I think that Russia believes that the US shale industry got off too easy again.  But maybe now that Russia is dealing with a major coronavirus outbreak in their country, they are not wanting to rock the boat too much.  Next week will be very interesting to say the least.

In local news, gasoline prices continue to rise with the price of crude.  Gasoline retail is inching ever so close to $2/gallon.  Diesel retail prices continue to be lower than gasoline retail for the first time in many years.  We have not seen this type of spread between gasoline and diesel since before 15ppm ULSD entered the market in 2007.

Propane prices continue to slowly inch higher.  Supply is in OK shape but not great.  Compared to years past, access to Canadian propane added an extra buffer.  If crude prices recover and Canada is able to export propane at full capacity, we will not be able to rely on Canada to save the day if we have a colder than normal winter.  I am still bullish on propane and recommend that everyone fill their tanks.  Next season’s heating contracts will be issued towards the end of June, first part of July.

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

Best regards,

Jon Crawford

Demand Uptick and Instability with China

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Good morning,

Crude prices gained momentum this week on demand increases and economies across the globe reopening.  WTI clawed back to almost the mid $30’s before cooling off yesterday on increased refinery runs due to refining margins returning.  The big news is the possible change in tone on our trade relationship with China.  Crude markets are worried that increased sanctions and derailment of trade talks in China will slow the recovery from the coronavirus pandemic.  In the US, appetite for gasoline is starting to recover but inventory levels are rising.  The relationship is delicate because if demand slips at all in the next three months, we could be right back where we started with a very oversupplied market.  I still believe we are well over a year away from seeing the crude and refined markets balance out.

In local news, demand has clawed back over 30% what was lost in April.  Summer weather and reopening of the economy are bringing people back to their cars.  Cost of gasoline and diesel have recovered some loses as well, but I expect to see gasoline and diesel retail prices remain below $2/gallon for the next month.

Propane future pricing continues to rise based on lackluster demand, decreased production, and increased exports.  Although the alarm bells are not ringing yet, i don’t expect to see propane prices fall.  Summer fill season is in full swing.  I am recommending that everyone fill their tanks in the next month to be safe.  Next season’s contracts should be released towards the end of June.

As always, if you have any questions, comments, or concerns, please feel free to reach out.

Best regards,

Jon Crawford