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

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

Good morning,

I woke up this morning and felt it best to take a moment and honor all service persons who gave the ultimate sacrifice of their lives defending our incredibly awesome country. Even though our country can go through hard times at home, we are extremely fortunate and blessed to live in America. I wish everyone safe travels and enjoy remembering that our long weekend came at a significant cost.

Crude oil prices rose to start the week based on Saudi Arabia saying “look out” to short sellers of crude. The next OPEC+ meeting is during the first couple days in June. But then yesterday, Russia said that they are not planning on any more cuts and don’t see a scenario where OPEC+ would approve additional cuts. The announcement caused crude oil prices to collapse. OPEC allowed Russia to play a part in meetings back in 2008, so the difference in opinion could be causing some friction and fissures in OPEC. We will see what happens at the meeting. And then of course there is the US Debt Ceiling talks which is putting all traders on their heels. So for now, we are in a “wait and see” moment. I would not be placing any long-term hedging bets on crude oil at this time.

Gasoline and diesel prices in the Chicago market dropped a bit towards the end of the week. We might see a little relief on retail prices at the pump, but not too much. Although some refineries that were down for over a year have restarted, a very high volume refinery has struggled to get gasoline back online. However, I expect supplies to be healthy and ready to go for the summer season. But retail prices on gasoline will continue to be higher because of the crude oil crack spread incentives to produce diesel.

Propane is bouncing back and forth in a very narrow range. Summer fills are starting to pick up and next season’s heating contracts have been released. So look in the mail for contract information coming your way, or feel free to call our office and get yourself locked in for next year. The great news is that the coming season’s contract pricing is 30 cents/gallon cheaper than last year! 🙂

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 you all well. I am writing my weekly update a bit early. WTI crude prices were on a ride higher for four straight days based on the strong dollar and talks of no recession, as well as American oil companies announcing they plan to be disciplined just like OPEC to try keep WTI price above $70/barrel. Oil companies across the globe have made it pretty clear that $70/barrel WTI is the price floor. Although there was a slight sell-off and profit taking today, WTI will still not close below $70/barrel today. Inflation data was “devil in details” like usual, China’s economy slowed less than anticipated, the EIA reported large draws in gasoline and distillates, and the UK is confident they will avoid recession. But, the big news supporting crude oil prices is once again Pres Biden saying he is going to start purchasing crude oil to refill the Strategic Petroleum Reserve. The SPR is currently at the lowest level since 1983. Since making the statement public, support for crude oil prices will remain strong. The sell-off today was a bit of profit taking on the latest run higher and Jamie Dimon from Chase bank saying that the mid-bank failures might not be over yet. So you combine a bit of higher prices with some fear thrown in there and traders with try and bet on the arbitrage. I think we will experience WTI prices climbing back higher tomorrow into the weekend.

In local news, gasoline and diesel cost rose over 30 cents in the past four trading sessions before giving back a bit today. In our local market, we are now into farm season coupled with refinery maintenance. I think we have some supply issues working their way out between the Group and Chicago spot markets. For now, I expect to see diesel prices and gasoline prices remain higher than the low last Monday. Even if crude prices fall, we could experience higher prices in finished product due to refiners running into issues with their maintenance and looking to export barrels instead of keeping wet barrels in local markets. Only time will tell.

Propane has been looking very steady and making small prices moves with the WTI crude oil trade. The good news is that summer fill prices continue to drop. Now is a great time to fill your tank, and I think next week heating contracts for 2023-2024 season will be available! The contract price for next heating season will be much lower than the previous winter season. During a time of inflation, propane is experiencing deflationary pressure due to an abundance of inventory, even though exports are at record levels. In addition, we don’t see production slowing anytime soon. Keep your eyes peeled for the contract mailing or feel free to call us next week. Remember, filling your tank in the summer benefits the supplier by giving the supplier allocation access for the coming winter to guarantee that propane will be efficiently available in the marketplace. We are a bit more flexible with our summer fill volumes to try and help everyone take advantage of cheaper prices.

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

Best regards,

Jon Crawford

Good morning!

Well, the fear of recession, midsize bank failure contagion, and the FED raising interest rates a quarter point hammered crude prices this week.  Even though WTI crude price is finding support on Friday, WTI could report three straight weeks of loses.  I figured that traders would take profits on Friday and buy back in since WTI fell below $70/barrel which is the current “magic price floor”.  Midsize banks are continuing to lose deposits.  The interesting fact this week was that most of the midsize banks losing deposits have a great balance sheet and are not in any sort of financial trouble!  The main issue is that the news is constantly hammering midsize bank failure so their customers are pulling their money out and moving to the big banks, like Chase, Bank of America, Wells Fargo, etc.  Unlike 2008 when the big banks were in trouble for making risky bets, the midsize banks are the vulnerable banks without making many risky bets!  Yes, some midsize banks have bad balance sheets, but this week, healthy midsize banks got hammered due to customer fear and lose of deposits.  In addition, when the FED raised the interest rate another quarter point, the fear of recession only made the problem for midsize banks worse.  The news is constantly reporting that customers need to be in safer larger banks.  Unfortunately, the banking crisis unfolding before us is not as bad as the situation being sold.  The ECB (European Central Bank) also raised interest rates this weeks adding to the fear of global recession.  However, India and China reported healthy economic growth as well as a nice forecast for the year.  The war in Ukraine continues, England is a mess, and the US seems to be dead set on waiting for the FDIC to raise deposit protection to calm the midsize banking failure contagion.  Although recession fears won this week in the marketplace, traders of oil forget that OPEC+, as well as American producers, are being very disciplined with their production.  I would not be surprised if we start to see more significant draws of crude oil inventory in the US, as well as OPEC+ announcing even further cuts at their next meeting in the first part of June.  In fact, if WTI starts to fall towards $65/barrel sooner than later, I could see OPEC+ having and emergency meeting and cutting production before their.  An emergency meeting has been used in the past to stop the falling knife.  For now, I think we are in a falling knife scenario based mostly on fear.  Remember, markets are not the economy. Markets behave irrationally.  Once again, let’s see what next week brings!

In local news, gasoline continues to trade sideways as builds in inventory continue acorss the US, even with decreased production.  Diesel prices have collapsed well below my predicted floor.  I am shocked at how low diesel prices continue to move.  Although there is much profit taking in the market today, I believe we will see cheaper diesel prices until demand for farming and the calming of the almost “meme” banking crisis ends.

Propane prices coninue to fall and I believe we will see the lowest prices towards the end of May.  Production is strong and inventories will start to build quite dramatically over the coming months.  Next season’s heating contracts will be cheaper than this year.  And remember, if you can, please order a summer fill.  Not only will the price be lower than the nest season’s contract, but summer fills help propane companies build allocation rights for the coming winter which ensues reliable supply for the state of Wisconsin.

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

Best regards,

Jon Crawford

Happy Friday!

I hope this email finds everyone well.  The news headlines of the week really tell the story of the WTI crude trade.  And just like my favorite song from Queens of the Stone Age… “No One Knows”.   Monday:  “Oil rises, but set for weekly loss as economic uncertainty weighs.”  Tuesday:  “Oil prices settle higher on optimism about fuel demand in China.”  Wednesday:  “Oil dips 2% on economic woes and strong dollar”.  Thursday:  “Oil drops 4% as recession fears outweigh US crude oil inventory draw.”  Friday:  “Oil steadies after Russia says global oil markets in balance.”   So… no one knows.  🙂   Is a recession going to hit hard as the FED continues to signal more rate hikes because inflation data continues to be messy: home prices falling, cost of some goods falling, slowing economy and record credit card debt, but consumer spending is staying high as well as high wages coupled with unemployment staying low.  In addition, we are trusting information from Russia and OPEC as the driver for prices higher.  Although WTI crude oil looks to close lower this week, unlike last week, refined products moved lower.  The amount of refining capacity worldwide continues to grow and traders are starting to get a little spooked that oil markets will be tight but an abundance of refined products will develop due to global recession.  The fears remain even as China continues to report growth.  However, you must take the info from China with a grain of salt.  No one is ever allowed to confirm nor deny the economic info coming from China.  So in conclusion, just like I started this paragraph with my synopsis of the WTI crude oil trade this week… no one knows.  🙂

Gasoline prices in the Chicago market continue to hold steady as refiners continue to produce more diesel than gasoline based on the anticipation of weak demand this summer.  But fears of global recession have pushed diesel prices below the cost floor that I thought was firmly set in place.  Diesel prices fell to a price lower at $75/barrel WTI than when WTI price touched $67/barrel during the “Black Swan” potential banking crisis!  I have never seen such bizarre trading activity since 2008.  Nothing seems to make sense in both the crude oil trade as well as the Chicago spot market trade.  What I can say, is that our neighbors in the Group are experiencing some of the most volatile trading in many years.  I believe Chicago might see some spot market price blowout higher on diesel because farmers are going to hit the fields hard for planting due to very sporadic weather.  And I also believe that Chicago could be in for a run higher on diesel prices this fall with harvest, especially if global prices for diesel are higher than spot prices in America.  For now, retail prices at the pump for gasoline should stay fairly steady, but retail diesel prices might ease a bit.

Propane prices dropped a little bit with the drop in crude price, but not nearly as much as usual.  I believe that we will see lower prices in May as we transition out of winter economics and supplier/retailers push to build allocations for next winter.  The United States is going to finish this winter with 50% more propane in inventory compared to last year!  I believe this might be a record.  The reason is due to a very mild winter as well as strong production.  I am very confident that 2023-2024 winter heating contracts will be lower than this past year.  But I am fairly bullish on 2024-2025 winter and beyond.  The reason is that I believe American producers of crude oil and OPEC will continue to try and keep prices high through lower production, especially if recession hits.  In addition, American propane suppliers will export at record rates with the current glut of propane, as well as not ordering as much rail propane from Canada moving forward.  For now, the consumer should be able to enjoy lower propane prices throughout the summer and lower heating costs for the next winter compared to last.  As I’ve been writing, not many commodities are cheaper for next year compared to last year!  Therefore, next winter propane customers should be very happy compared to those with electric or natural gas heat.  🙂

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

Best regards,

Jon Crawford

Good afternoon!

I am writing my update a bit earlier due to conflicts tomorrow.  This week was very interesting.  “Risk off” took over the news wires as recessionary signs flashed all over the markets.  More attrition at large tech firms were announced.  The dollar gained back strength.  Bitcoin fell back below the $30k level.  Credit card debt continued to sky rocket to another record level.  The “repo man” took the most cars back last month since 2008.  Housing market purchasing slowed.  Fears of summer demand for gasoline are starting to take hold.  And most market makers are now pricing in a FED interest rate hike in May.  Now, that’s just American economic data!  On the world stage, refiners are expanding at incredible rates causing crack spreads to crumble in America and across the globe.  China and India continue to purchase Russian crude above the “cap” set by many countries.  So oil is flowing across the globe and refiners are moving forward at a quick clip, even though world recession could be on the horizon.  Even OPEC+’s large surprise cut is not really affecting the pricing that much because refiners around the world continuing to expand and run at high rates.  It’s amazing how much can change in one week.  Last week was “no recession in sight, and WTI oil is going to blow out towards $90/barrel.”  Now this week is “recession signals are everywhere and the FED is going to raise rates again.  Run for the hills!”  Even though I believe WTI crude oil will close below $80/barrel this week, I do not believe OPEC+ will let WTI crude oil price fall back below $70/barrel.  We would need another “black swan” event like the banking crises to experience WTI prices collapse that hard.  But for now, I would say the “risk off” is winning and cheaper prices are coming down the pipeline….for now. 🙂

In local markets, Chicago spot market never blew out in price to match The Group in spot diesel pricing.  In fact, as fast as The Group spot price rallied, the price collapsed this week.  Overall, cost of gasoline and diesel are going to end the week lower and I expect to see some falling retail prices next week at the pump.  However, with this high volatility, the drops can take some time as blended inventories work there way into the market.

Propane is sending a message loud and clear.  A price floor seems to be forming.  In other words, with how much WTI crude oil price fell this week, propane prices did not fall according to historicals.  I’m starting to see a floor for possibly summer and next year take shape.  Basically what the situation means is that propane producers have a certain price they need to make in order to keep operations running.  The cost of labor, materials, etc. continue to rise and I believe with the arbitrage to export, producers/suppliers are kind of saying “we wont make/sell for less than this certain price because it doesn’t make economic sense.”  Now, the good news is that I do believe that spot price in the summer will drop a little bit more, and I do believe that next heating season’s contracts will be lower than last year.  More to come as the volatility in the WTI crude trade continues.

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

Best regards,

Jon Crawford – Pres.