Tag Archives: lodi

WTI Crude Price Still Holding Around $80/Barrel

Posted on by

Good moring!

Happy Friday and cooler weather! Wow, was that a week of heat! As I have been writing, WTI crude oil prices continue to hold around $80/barrel. China reported less than stellar economic data again this week and crude oil prices dropped below $80/barrel for a couple days. But then recession fears in the US hit the news and the next day crude price jumped right back to $80/barrel. This week the top bank CEO’s and the FED are all meeting in Jackson Hole for the annual meeting on the analysis of the US economy. This morning, FED Chairman Powell stated that inflation is still too high and interest rates might go up a little more and hold for a longer period of time. The news sent crude prices higher, which is the opposite under normal economic conditions. Usually as the dollar gains strength, crude oil prices drop because crude oil is traded in dollars and customers can get more bang for their buck when purchasing crude. However, higher interest rates for longer have a greater chance of slowing down the US economy which lowers crude demand. Therefore, producers will cut production to increase the price rather than compete for market share. Crude producers are saying loud and clear they would rather pump less crude and make more money than collapse price and pursue market share competition strategy. I’m not too concerned about the economic issues in China since they have the power to do whatever is necessary to fix their economy. And I am still convinced that $80/barrel is the new norm for WTI Crude price. All oil companies are needing to make investments outside of oil, and $80/barrel works for all crude producers. We might see the occasional dip, but US producers will shut down rigs and Saudi Arabia will cut production to keep prices from collapsing.

In local news, diesel prices calmed down a bit. But the September futures contract expired, and just as I have been writing, the October contract shot up 15 cents per gallon. The reason is that diesel supply will be tight in Chicago during harvest. The Midwest is not going to run out of diesel, but logistics are going to be tough to manage and distributors like myself will have to chase terminals for a month or so. Gasoline prices have calmed down as summer ends. I see gasoline retail prices staying around $3.49/gal. However, diesel retail prices could jump back above $4.00/gallon and hold for the next few months.

Propane prices gained a little bit of ground this week even though the US is at record inventories. I believe exports will continue to skyrocket going into winter and Canada will use as much propane as possible for manufacturing as opposed to shipping to the US. In addition, if we have a warm winter, suppliers will keep prices high to make up for the loss in volume, which in turn will raise retail prices. As a reminder, contracts start in September and you still have time to take advantage of summer fill pricing.

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

Best regards,

Jon Crawford

China Doom and Gloom Affecting Crude Prices?… Not Just Yet.

Posted on by

Good morning!

Happy Friday! WTI crude prices took a little hit this week. China released less than stellar economic data, cut interest rates, and stopped reporting youth unemployment which has been at all time highs. The news caused crude oil prices to tumble and fall below $80/barrel for a brief second. But the strength of the US economy, the decreasing oil rig count in the US, and the cooperative discipline from OPEC+ to keep production cuts steady continue to support the narrative of tightening world crude oil supplies. In fact, regardless of China’s economy, crude producers seem to be in lock-step keeping production low in order to prop up prices and avoid a massive collapse. As I have been writing, I believe $80/barrel WTI to be the “new norm” moving forward for quite some time. Yes, we might have some dips below $80/barrel. But the timing will be brief as traders hedge bets at those prices which in turn prop prices right back up to $80/barrel. I also believe there is potential for upside price in WTI crude to breach $90/barrel. But for now, we should all start accepting the reality that current crude oil prices will probably remain the new norm regardless of what happens in the world economy.

In local news, diesel spot prices have come down from their highs. Diesel supplies in the US are still very tight and any major disruption in refining prior to harvest could cause a massive increase in diesel prices east of the Rockies. Most people in the industry are keeping their fingers crossed that the harvest is mostly completed before any hurricanes potentially affect Gulf Coast production. Gasoline prices have fallen a touch from their peaks as well. But again, as long as crude oil prices remain strong, both gasoline and diesel prices will hold firm.

Propane prices remain steady going into end of the summer. Although supplies are very high in the country, the appetite for exporting and Canada keeping more propane in house for manufacturing, prices will probably start to climb in Q4 of this year. If we have a mild winter, I also believe suppliers will increase their margin index to make up for lost volume. The action from suppliers will in turn raise the retail price of propane. I highly recommend topping off your tank by the end of September. We are being very liberal with our summer fill volumes.

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

Best regards,

Jon Crawford

$80/Barrel WTI the New Price Floor for Crude Oil?

Posted on by

Good morning!

Happy Friday! WTI crude oil prices held above $80/barrel this week. OPEC+ confirmed Saudi Arabia’s announced production cuts of 1M bpd happened in July. In addition, the IEA increased their outlook on crude demand for the end of year and into 2024. The US seems to be experiencing a softer landing around inflation which will continue to fuel demand for more crude oil. Producers seem to be determined to try and keep oil prices as high as possible. I believe that the world economies can survive at $80/barrel WTI. Therefore, I don’t see any incentives for a producer to go after market share by flooding the market with crude oil and collapsing price. Although the war in Ukraine is a wild card, the US Presidential election is coming next year and many voters are starting to rank ending the war in Ukraine as a top priority. So politics at home could play a major role in how the US government continues to send money to Ukraine. I would have to write for now that crude oil prices are nicely supported and I don’t see too many headwinds besides a complete collapse in the Chinese or American economies. But both countries have tools in the toolbox to heed any major recession.

In local news, diesel spot prices continue to be volatile as harvest approaches and two major refiners are going into maintenance mode. I could see diesel prices at the pump blowing out higher this fall for a brief period of time. Gasoline spot prices continue their slow burn higher. I expect to see gasoline prices peak towards end of summer. However, prices of gasoline could remain higher if refiners choose to produce more diesel due to the potential tight diesel market in the fall. The next few months will be very interesting in our local spot market.

Propane prices have followed crude oil prices higher. Spot prices have moved almost 20 cents/gal higher from the bottom. I recommend everyone to top off their propane tanks now and contract for the upcoming heating season. It’s hard to believe that colder temperatures are right around the corner!

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

Best regards,

Jon Crawford

Seat Belted For $80 WTI Crude Oil?

Posted on by

Good morning,

Happy Friday! WTI crude oil prices went ripping higher even though the FED raised interest rates to the highest in over 20 years. Inflation is finally starting to cool but demand seems to be strong and producers continue to be vigilant in limiting supplies. WTI crude prices are almost touching $80/barrel which has not been seen since last year. Unfortunately, unless a “harder landing” or recession starts to build contagion across the globe, I believe these higher oil prices are here to stay. As I have been writing, OPEC+, including American producers, are just not going to let WTI crude prices drop below $70/barrel for extended periods of time. Since crude oil prices have risen hard in the past week, the cost of all products connected to crude oil have risen as well. We have not seen prices drop one day the entire week. I guess we’ll see if there is any cooling or profit taking on crude prices next week.

The Chicago market has rocketed higher and given back all of the low spot basis of the past few weeks. Diesel prices have gone up 70 cents/gallon and gasoline continues it’s slow grind higher. Unfortunately, diesel supplies are going to be tight when harvest starts. Two of the main refiners in our market are going down for maintenance. So if there is a rush on harvest, prices of diesel could rocket even higher on tight supplies. For now, the days of cheap diesel are behind us. In addition, if Saudi Arabia continues to limit diesel shipments to the East Coast, Chicago refiners will move barrels east.

Propane spot prices have actually gone up 10 cents in cost the past week and a half. Propane future pricing continues to be weak. Given so many unknowns in the marketplace, we highly recommend everyone topping their tanks off by the end of August and contracting for next year. Even though propane inventories are in great shape, logistics of moving propane around the country continue to be difficult and could cause issues resulting in higher prices.

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

Best regards,

Jon Crawford

Slow And Steady Wins The Race

Posted on by

Good morning!

Happy Friday! Not much has changed in the crude oil markets since last week. Crude oil prices continue their slow and steady climb higher. WTI looks to close above $75/barrel this week. I believe $80/barrel on WTI is a better bet than price falling back below $70/barrel. There is so much synergy between all crude oil harvesting companies around the globe. Demand for crude oil will only increase as inflation eases and banks get comfortable with de-risking. Most large banks are merging/purchasing smaller banks and the portfolio of potential losses from office space rentals seems to be much less of a concern than previously reported. In cities where office space is dwindling and risky, other cities are experiencing massive growth. So the office space crises supposedly will be localized to certain markets, not a national crisis

In local retail news, I wrote last week that the Chicago spot market was very long on diesel and could go up possibly 50 cents/gallon at any point in the coming weeks. Well, the night I wrote my last blog post, diesel cost rose 50 cents/gallon in our market. The cost of gasoline and diesel continued to rise this week. I expect to see retail prices of diesel and gasoline at the pump move higher next week.

Although propane fundamentals remain weak, crude oil prices are starting to offer support from the floor that landed a couple weeks ago. However, propane prices did still drop overall in the month of July and we might see just a small decrease in propane retail prices/contracts in August. However, the price change, if it happens, would be minimal and we still have a week left 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 Oil Prices On A Stair Climber

Posted on by

Good morning!

Happy Friday! Crude oil prices continue to climb higher even though recession fears in the US and China linger in the background. I believe that traders are buying into the idea that oil producers in OPEC+, including the US, are being very disciplined with their harvesting and capital expenses. Everyone would rather sell less oil and make more money than gain market share from a competitor. As all oil companies look to diversify their businesses, the action of “flooding the market” seems to be off the table. WTI crude oil prices broke through $75/barrel this week. As I have been writing, I do not see a scenario where WTI prices hold under $70/barrel. American producers will cut production to keep prices higher if WTI starts to drop dramatically. The war in Ukraine is continuing to put pressure on Russian crude oil sales, but as long as China and India continue to purchase Russian crude, we shouldn’t experience any major spike in price. We will probably continue to see WTI price ebb and flow between $70-80/barrel. In addition, Saudi Arabia announced further cuts on shipments to the US East Coast. The move will put pressure on the Gulf Coast and Chicago markets to move barrels east. The scenario will eventually cause a spike in refined products in Chicago and the Gulf Coast due to higher demand for diesel during harvest and supplying the East Coast. Although recession fears continue to dominate the news, I would not relax and bet on crude oil prices dropping through the floor.

In local news, refined diesel prices out of the Chicago market are hitting the lowest cost of the year. But the devil is in the details. Chicago diesel is trading over 30 cents/gal under the Group and East Coast markets. Chicago has the ability to move barrels to the East Coast markets. I believe there is a “head fake” going on. In other words, what’s going on in Chicago will probably be short lived and diesel prices will jump much higher at some point in the near future. The futures on diesel out of Chicago are much higher and off the lows of back in January. Gasoline prices continue to remain in a narrow range and I don’t expect to see pump prices on gasoline drop much in the near term. Diesel retail prices might drop, but most retailers will use caution because the cost could jump much higher on any given day.

Propane prices continue to climb higher. We are at the lowest retail price of the year, but if crude prices continue to climb higher propane prices will follow. We highly recommend all customers top off their tank right now and contract for the upcoming heating season. Remember that you have until the end of August to lock in your price.

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

Best regards,

Jon Crawford

Our Friend Volatility Will Return At Some Point

Posted on by

Good morning and happy Friday!

WTI crude oil prices continue to trade in the narrow range of around $69/barrel and $71/barrel. The continued hot US economy is pushing treasury yields higher. And Saudi Arabia announced their cuts in production will continue indefinitely to keep WTI price above $70/barrel. Saudi’s are cutting shipments to the US as well which puts pressure on crude oil producers to move barrels east. Quite honestly, the crude oil trade is fairly boring these days. Although, we did have a longer holiday weekend with low volume trading on the market. The US is trying to make peace with China, but India is stepping up to the plate to fill the gap of cheaper labor and production in the world economy. There is definitely a shift in the world economic order taking place, but the resolve will still take a long time to play out. Oh, and there is still the war in Ukraine that is not showing any signs of slowing down. The US has a presidential election coming up. I believe that the next election will be one of the hottest elections in years. We are dealing with the most issues at home and abroad that I have ever witnessed in my lifetime. The following year will be wild and intense. I’m not quite sure how everything will play out in the marketplace, but I do know that our old friend “volatility” will return at some point.

In local news, the cost of gasoline continued a slow burn trend higher. Gasoline retail prices will continue to move in a very narrow range, but possibly higher in the coming week or so. I do not see gasoline retail prices jumping above $3.50/gal unless prices start to move in the crude oil market. Diesel prices continue to fall as our Chicago market seems to be longer on diesel inventory than expected. And just like gasoline, I expect to see diesel retail prices stay below $3.50/gal for the coming week or so.

Propane spot prices unexpectedly fell some more over the past weeks, but out months continue to stay higher. Our summer fill prices dropped a bit but nothing drastic enough to cause FOMO for those who purchased earlier. Our contract prices for next year are out and I highly recommend everyone to contract because the value of propane price percentage compared to crude oil price is extremely attractive. The best strategy is to top your tank off by the end of August, and then contract for your remaining winter gallons.

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 Weekend!

Posted on by

Happy 4th of July weekend!

I want to wish everyone safe and happy travels this weekend! I hope the weekend is fun and full of laughter! I will keep the update fairly short and straight forward. And that’s easy because not much happened this week! 🙂 Crude oil price traded in a very narrow range all week. There was a little news here and there that would try and move prices: possible civil war in Russia, Saudi Arabia cutting oil shipments to the US, and the US Crude Oil Inventories reporting a huge draw on Wednesday. I guess traders are still in a “wait and see” pattern. The week leading up to a holiday and the week after can be a bit wonky as many traders take vacation and not much liquidity moves in the market. So we should probably see some more action in the coming weeks.

Gasoline cost ended the week only five cents higher than Monday. And diesel cost ended the week about five cents lower. Therefore, I would not expect to see much change in retail prices at the pump going into the travel weekend. This is good news to all the drivers out there. The usual “run up” on gasoline price going into a big holiday weekend did not happen.

Propane prices traded so narrow it’s almost like they didn’t even trade. We are officially at a new low price as competition for summer fills heated up (no pun intended). We highly recommend everyone to fill their tanks now and contract for the next heating season.

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

Best regards,

Jon Crawford

Same Old, Same Old

Posted on by

Good evening!

I hope this message finds everyone well. I wanted to first announce that there will be no updates for at least the next two weeks as I travel with family. But I’ll get back into the swing of things when I return!

WTI crude oil traded this week again in the same narrow range of just below $70/barrel and just above $70/barrel. OPEC+ had their meeting last weekend and decided to keep current cuts in place. However, Saudi Arabia voluntarily announced another 1M barrels/day cut in oil production. The additional cut puts Saudi Arabia’s production at the lowest level in over 20 years. The news pushed the oil markets higher to start the week. But as the week dragged on, recession fears and too much refined products in America started to move crude prices lower. Even though crude prices eased a bit based on recession fears, refiners are being very vigilant to keep refined prices high. Producers and refiners are very comfortable selling less product for more money. The mentality of “less for more” is new since Covid and doesn’t seem to be going away. And as margins increase from production to refining, the cost is passed along all the way to the end consumer. And as the cost other goods and services remain inflated, I expect to see healthy margins on gasoline and diesel at the pump as well.

In local news, farming is in full swing, even though most of the Midwest is in drought. Supply tightness coming out of Chicago is keeping a floor on both gasoline and diesel prices, and even pushing them higher. I expect prices for gasoline and diesel to remain inflated throughout farming season and throughout summer into harvest.

Propane prices continue to remain weaker in comparison to other commodities. We highly recommend everyone take a summer fill now and contract their next season’s heating gallons. Considering how weak propane is trading in percentage to crude, if crude oil breaks out higher in price, propane price will follow. Our contracts are slowly being mailed out, but feel free to call our office, order a summer fill, and lock in your price for next 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 Oil On A Swing Set

Posted on by

Good morning!

Happy Friday! I hope everyone is staying cool. There is not much to report this week. The possibility of not passing a bill to raise the debt ceiling coupled with some not so great economic data from China and the US sent WTI Crude prices below $70/barrel in the middle of the week. In addition, OPEC+ meets this weekend. Saudi Arabia is calling for possibly more cuts in production while Russia is looking to stay the course. Russia has taken some Saudi market share. However, Saudi Arabia is more interested in gaining cash for diversity investment from oil. Therefore, the calls for Saudi to “flood the market” and teach Russia a lesson I believe are wrong. Saudi Arabia has some of the lowest cash reserves on hand due to continued investment in US and other countries’ companies as well as their own infrastructure. The prediction that Saudi would risk in a demand environment as volatile as we have seen in years seems reckless. Their behavior over the past two years has been much more disciplined and I believe their actions will continue to reflect their on going concerns. WTI oil prices, again, dropped below $70/barrel for about one day on the combo of all the aforementioned news coupled with the EIA report showing builds in national inventory. But as soon as the debt ceiling bill passed the House, and then the Senate, WTI price popped right back above $70/barrel. So prices were on a swing set this week. WTI price started the week above $70/barrel, fell to about $67/barrel mid-week, and then look to end the week at the price right about were it started above $70/barrel. OPEC+ meets over the weekend, so the announced decision from the meeting will drive markets next week.

In local news, refined products followed the crude oil market for the most part. Gasoline prices continue to stay steady as refiners continue to take profit margins over market share based on jitters of lower summer gasoline demand. Diesel prices dropped a bit further due to recession fears. The main drivers of potential recession were the debt ceiling talks, OPEC+ meeting, and the FED raising rates further which would raise crude oil price. But if crude prices drive too high, the possibility of pushing the country into recession becomes stronger which in turn hurts diesel demand. There is a tightrope balancing act going on between oil harvesting and refiners.

Propane prompt prices fell a bit further. However, the out months have been staying fairly steady. I would highly recommend ordering a summer fill and locking in your price for next year. Our summer fill price is probably the lowest we will see and contracts are well under the $2/gallon price of last year. Please call the office to place your order and request a contract. We will be very liberal with summer fill arrangements to try and give everyone the opportunity to take advantage of the low price.

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

Best regards,

Jon Crawford