Good afternoon,

Earlier today, OPEC+ agreed to increase daily production cuts to 1.7M barrels of oil.  The increase from 1.2M to 1.7M was a surprise to the markets, but the devil is in the details.  When you look at the past six months and the reported quotas from members of OPEC, the daily average was actually close to 1.7M barrels per day.  Due to Saudi Arabia and others cutting more than promised, the deal, although higher in posted cuts, is actually not much of a change from current market conditions.  In addition, waivers were granted for condensates which lessens the blow on the market.  Saudi Arabia announced they will continue to cut an additional 400k barrels/day off their runs which could make the cut closer to 2.1M barrels/day.  But time will tell.  Saudi Arabia received their evaluation for Aramco and is looking to go public with a 5% stake in their 1.7 trillion dollar evaluated state owned company.  OPEC+ is planning on meeting again on March 5th, 2020 to reevaluate the market conditions.  Crude prices jumped higher on the announcement but not as high as expected.  Then the US Jobs report was released as well as rumors of a China/US trade deal.  All the combined news today pushed WTI crude prices to $59/barrel.  However, WTI is still struggling to regain the highs reached earlier in the year.  Even though the news today was very bullish crude, the continued high prices will allow the US shale producers to hold their record production levels keeping overall crude supplies in balance.  At this time, I don’t see crude prices making any runs higher to end the year unless an epic US/China trade deal is reached.

Retail gasoline and diesel prices relaxed a bit to start the week, but clawed back much of the cost by the week’s end.  I don’t expect to see much price movement at the pump over the coming week.

Propane supply is starting to improve since the CN Railroad ended their strike last week.  Propane prices have held firm even though crude prices have risen.  There is still an abundance of propane available in the country and production is healthy.  Plus, warmer than average weather continues to show up in our area keeping propane prices from rising any further.  Next week we will experience a two-day cold snap, but that looks to be about it for cold weather in the coming weeks.

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

Best regards,

Jon Crawford

Greetings!

Well, winter snuck up on us pretty fast to start November!  Single digit temps and lots of snow the past week have made November feel like January!  Corn drying demand and the colder than normal temperatures have put a lot of pressure on propane distribution.  There is not a shortage of propane, but there is only so much propane that can move through distribution at one time.  Hopefully by the end of November harvest will be almost completed and temperatures will be back up to normal.  But for right now, we are calling for colder than normal through the end of November.

Crude prices spiked on the hopes of a China trade deal.  Although crude prices are still very low, we don’t expect to see much more upward movement.  I am not convinced that demand is going to outstrip supply in the coming six months.

Retail prices on gasoline have dipped a bit.  But I would not expect to see prices drop much more.  Diesel prices have risen since winter additive blending and #1 oil have entered the supply picture due to the extreme cold.  Winter additive blending and #1 oil can add up to 20 cents/gallon to the cost of diesel fuel.  I would expect to see diesel prices remain higher now that winter temps are here.

Propane prices have risen due to the massive demand spike in the Midwest.  I do not expect to see prices relax from their current levels anytime soon.  If you are a will-call customer, please make sure to check your tank!  This cold snap has caught many customers off guard.  Also, please make sure to salt or sand your driveway to ensure a safe and efficient delivery, and that there is a clear path to your tank.

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 everyone had a great Halloween even though it was cold and snowy out.  Sounds like the cold weather is going to stick around for awhile.  If all weather patterns hold, we are in store for a colder winter with a lot of snow.  I will keep you updated based on the prediction services we subscribe to.

Also, I wanted to clarify that there is no propane emergency in Wisconsin.  Gov Evers issued an extension of service hours exemption this week and made reference to a propane emergency.  This is not true.  We are having a high demand cycle with corn drying and the early cold weather, but there is no emergency.  Basically, trucks are waiting extra long hours to load product, so we want to make sure that drivers have enough hours on their books to deliver the product.  Once corn drying is over, distribution will be back to normal.  But there is no emergency, shortage of product for this winter, massive price spikes on the way, or anything to be too concerned about at this time.  I will keep you posted as the month goes along.

Crude prices continue to trade narrow range.  We are still predicting that WTI crude oil will trade around $55/barrel through the end of the year.  Nothing new on this front.

In local retail news, refinery maintenance has been longer than expected and supplies are starting to get a bit tight.  I would expect to see prices at the pump on gasoline and diesel rise next week.

Propane prices are rising due to increased demand, but nothing out of the ordinary.  If you are on a will-call, please remember to check your tank.  The early cold and snow has caught some customers by surprise! 🙂

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

Best regards,

Jon Crawford

Good morning,

Headlines around a softening economy and lower refinery runs continue to weigh on crude prices.  Economic data is starting to spoke investors as they continue to move money out of long positions on crude.  WTI is looking to close below $55/barrel this week.  Many firms are lowering outlook for crude prices into 2020 as well.  History shows that crude prices tend to stay low during election years as well.  As conditions in Syria hold some Middle East tensions, OPEC continues to say they will cut production to keep prices from falling off a cliff.  Considering that the next meeting is not until December, I believe OPEC is scared that crude prices could fall through a trap door and collapse.  For now, I think WTI crude prices will remain under $60/barrel for the remainder of the year and have a long ways to go before stars align to pop the price out of its current trend.

In local news, Chicago refinery markets are out of refinery maintenance mode and flush with product.  Retail prices on gasoline and diesel continue to soften.  I expect to see prices at the pump continue a slow downward trend.

Propane prices have leveled off for now as demand is starting to kick in.  I think you will see propane prices start to move higher next week with continued cold and crop drying demand.

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

Best regards,

Jon Crawford – Pres.