Merry Christmas and Happy Volatility!!!

Good morning,

I hope everyone had a safe and Merry Christmas!  The weather was nice for travels and fuel retail prices were low for keeping some extra spending money in your pockets.  The last few days have been an absolute wild ride.  On Christmas Eve, the stock market and crude oil futures posted one of the worst sell offs in history.  The causes were fear of economic downturn in 2019, surplus crude oil supplies overtaking demand, Munchin giving a weird call to the banks to try and calm markets, OPEC not cutting enough, record US crude production, and the US Government shutting down.  Then we had Christmas and a day off.  And then we woke up yesterday to a completely different outlook.  The outlook included the following gems: crude oil supplies might be in balance soon according to OPEC;  OPEC, Russia, and Canada are all willing to cut even more supplies and sooner if needed; economic outlook is very positive for 2019 with high demand for crude oil; record spending on retail for the holidays; and overall “everything is awesome and gonna be great in 2019.”  The sentiment change caused a volatile record day gains in the stock market and crude futures…. Our troubles are over!!!…  The sell off is over, crude has bottomed, and December was a fluke…  Then we woke up this morning and the markets are selling off again.  So basically we have markets that are out of control and I say “get out of the way.”  Traders are desperately trying to call a bottom but it just doesn’t want to show its face yet.  So for now, sit back and watch probably the bumpiest ride in the market since the last correction.

In local retail news, retail gasoline has hit $1.99/gallon in the surrounding market areas.  Diesel retail prices are holding near $2.79/gallon.  I don’t think we will go much lower at the pump.  But I also don’t see it going back up anytime soon, especially since we went below $2.00/gallon on gasoline at the pump.  Once that “1” comes out in front on the price signs at the street, it’s very hard to put the “2” back up.

Propane retail prices are holding steady on good demand.  Inventories are around the five year average.  Although we had some warm weather here in December, don’t forget to keep your hat and mittens handy.  Some cold weather is on the way with some arctic blasts possible in the middle of January.  Stay tuned for more info.

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

Have a safe and Happy New Year’s celebration!

Jon Crawford – Pres.

Fundamentals Ignored

Good morning,

Traders continue to ignore fundamentals and have abandoned all hope on investing in crude.  WTI crude dropped below $50/barrel and is fast approaching $45/barrel.  The main driver is a fear of economic meltdown in 2019 causing demand destruction coupled with over supply.  Currently the U.S. is exporting more crude than importing and our production is at record levels.  In addition, Russia is pumping strong.  However, demand is still strong in the U.S. and crude inventories have dropped a bit in the U.S.  And world demand continues to be strong.  Also, the Middle East is continuing to struggle with geopolitical issues, the largest Libya oil field is under siege and out of production, and Saudi Arabia is cutting production more than expected.  In other words, when looking at supply and demand, we are moving closer to a crude deficit than a surplus, coupled with extremely volatile geopolitical issues.  But traders are staying on the sidelines and buying the rumor of economic meltdown in 2019.  So for now, we sit back and wait.  There is a potential for the bottom to fall out, but the true fundamentals point to higher prices.  The crude market is now trading on emotion which is scary.  Therefore it’s best to stay away and wait for a bottom to be carved out.  There is a tremendous opportunity at these low prices, but I’m not 100% in until a bottom is carved out.  At the end of the day, there is still more long term risk of higher prices as compared to lower prices.  The question is, how long will these lower prices stay?  That’s the billion dollar question and only time will tell.

In local news, retail prices on gasoline are ever so close to $1.99/gallon in Central Wisconsin and will probably get there.  Diesel prices have now moved below $3.00/gallon and will probably stay there for some time.  These lower prices will help for the holiday travel season coupled with warm weather.

Propane retail prices have remained steady as we experience a lull in demand before January.  For now we are predicting a cold January.  The weather is looking to change around the end of December and move colder into January with a deep freeze possible by the middle of January.  The analog data is also starting to show that February could be very cold as well.  So enjoy the warm Christmas weather because this could be the last warmth for a couple months!

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

Best regards,

Jon Crawford – Pres.

Tug of War

Good morning,

Crude prices this week are stuck in a game of “Tug of War” right now between geopolitical issues and true fundamentals.  Global recession fears are weighing on traders’ minds as we end the year which is keeping “Big Money” from going long on crude.  The fears are weighed by China/US trade war, disappointing economic data, and BREXIT drama.  Not to mention that Saudi Arabia and Russia continue to make headlines which have potential for supply issues.  But in true fundamentals, the US exported more crude than consumed last month.  So there are buyers out there.  It’s a head scratcher.  Big Money is stuck on short positions right now which I think will hold until the end of the year.  I feel that money managers are going to look at January as a potential entry point on crude.  So for now, enjoy the Christmas gift that the traders have given us!  But when Big Money enters the market, be prepared for a quick increase in crude prices.  And I do believe it’s not a matter of “if”, but “when”.

Retail prices on gasoline and diesel have stabilized for the moment.  We are looking at around $2.15/gallon on gasoline and $3.00/gallon on diesel.  I think that these prices will hold potentially for the end of the month.

Propane prices have also stabilized but are starting to carve out the potential for an uptick.  Demand is rip-roaring right now.  The current warm spell is looking to end by Christmas, with the potential for colder than normal coming back, including a possible Polar Vortex in early January.  As always, please make sure your driveway is clear and there is a path to your tank this winter.

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

Best regards,

Jon Crawford – Pres.

OPEC Meeting Disappoints

Good afternoon,

The big OPEC meeting today in Vienna did not impress traders.  Hopes were for over a 1.5M barrel/day cut, and that does not look like it will happen, even when Russia weighs in tomorrow.  In addition, the economic outlook is starting to look weak for the U.S. which is causing a massive sell off in the market.  To top it off, China and U.S. trade tensions are high with summit talks being interpreted differently between the two countries as well as Canada arresting an executive from the Chinese firm Huawei.  The traders have reacted by selling off even more crude contracts.  WTI crude prices have now dropped back to their lows for the year.  The bullish news being reported was a major drop in crude supplies here in the U.S., Iran threatening to block the Straight of Hormuz, and Canada offering to cut crude production to help prop up prices.  For now, traders seem to think the world is entering closer to surplus on crude supplies and bearish news on the economy is winning the war of words.  For now, cheap oil prices are maybe here to stay until year end.  We will need to wait for Russia’s reaction as well as OPEC’s official report.

In local news, retail prices on gasoline have bottomed out near $2.19/gallon, and retail diesel prices are right around $3.00/gallon depending on the winter blending applied.  I would expect to see these lower prices through Christmas.  So for now, we can enjoy some lower prices for the holiday season!

Propane prices have bottomed as demand continues to climb.  We officially experienced the coldest November on record.  For all will-call customers, please make sure to keep an eye on your propane tank.  Usage is up more than 20% this year.  As a reminder, please make sure to have yoru driveway cleared and a path available to your tank throughout the winter.  We appreciate all your help for making safe and efficient deliveries. 

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

Best regards,

Jon Crawford – Pres.

Bottom Taking Shape

Good morning,

As you have noticed based on the price of gas at the pump, prices are continuing to drop.  WTI crude traded below $50/barrel for the first time in over a year this week, but jumped back up over $50/barrel right away.  I feel that the market is carving out a current bottom at about $50/barrel until OPEC+ meets on Dec 6th.  There is so much chatter going on right now that everyone seems to be on the sidelines just waiting for the meeting.  In addition, the FED stated that they might hold off on continuing to raise rates.  This helped support crude prices on a fundamental level.  But the geopolitical issues are outweighing supply and demand fundamentals right now.  When these situations occur, if we feel crude is undervalued, an opportunity is available.  And right now, I believe an opportunity is available.  I see no reason that OPEC+ will come out of the meeting without planned production cuts based on the price of  BRENT crude needed to balance national budgets.  They understand that cuts will lead to loss of market share to the U.S.  The U.S. just surpassed Russia to become the number one producer of crude at 11.7 million barrels/day.  And speculation is saying that the U.S. could grow by another 2 million barrels/day!  The cartel tried in 2016 to “punish” the U.S. with low prices, but the U.S. persevered and excelled.  So I don’t see OPEC+ going through that experiment again.  In addition, Russia is playing around with flexing it’s military muscle in the Ukraine again.  The U.S. Senate just voted to stop funding support for Saudi Arabia in the war in Yemen.  The Saudi Prince MBS is in hot water for his possible ordered killing of a journalist.  Some feel that Trump’s support of MBS is to try and convince him to not cut production.  However, Trump pulled out of a full enforcement of sanctions on Iran which threw egg in the face of Saudi Arabia and caused much of the current price drop and billions in revenue for Saudi Arabia.  MBS is already in trouble for the killing, so I don’t see him allowing his economy to tank as well.  That all said, there is an opportunity to purchase cheap refined product and lock in prices for next year.  I expect things to change in December.  But only time will tell if geopolitical factors continue to outweigh supply and demand fundamentals.  I believe we are about $5-10/barrel undervalued on crude prices right now.

In local news, gasoline retail prices continue to dip below $2.29/gallon.  Diesel retail prices are also heading towards $3.00/gallon depending on the winter treatments being used.  I expect to see these prices hold over the coming week leading up to the OPEC+ meeting.

Propane prices have remained steady with high demand.  I don’t expect to see propane prices drop any lower this winter.  As a reminder, please make sure there is a clear path to your tank and that the driveway is plowed.  If you are on a will-call for delivery service, please call at 30% and above to insure efficient and timely delivery.

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

Best regards,

Jon Crawford

Happy Thanksgiving!

Happy Thanksgiving!!!

We hope everyone enjoyed a safe and relaxing Thanksgiving! We are so grateful for all of our customers each and every day. We hope the coming holidays bring much happiness, love, and laughter.

From everyone at Crawford Oil and Propane!

 

P.S. Prices are continuing to drop.  Markets are closed on Thursday and Friday this week, so I will update everyone next week.  But for now, prices are continuing to slide.

Small Floor in the Making

Good morning,

Wow, myself and every hedge fund never saw this week coming.  I am still perplexed by the last week in crude oil trading.  Traders are now negative for the year on long crude oil trades.  This week hedge fund managers removed all money from forward crude positions and dumped them into natural gas.  Natural gas is seeing record price increases due to low inventory levels, high exports, and low production.  Natural gas is shaping up to be nasty in price and supply this winter, much like propane in 2014.  WTI Crude prices found a bit of support at $56/barrel after falling through the $57/barrel support price.  OPEC, mainly Saudi Arabia is trying as hard as they can to convince traders that they are going to cut production.  This week they announced cutting shipments but not production, but yesterday they finally announced that they are looking to cut 1.4M barrels/day in 2019.  They are looking to drum up support for the upcoming December OPEC meeting.  The IEA is also being very bizarre in their predictions as well.  They continue to say that 2019 shows a slowing economy and world demand, but then turns around and says the world needs another 10M, yes 10M, barrel/day production in the next five years?!  Basically, you can take it or leave it with the IEA announcements at this point.  There is not much predictability in their news.  For now, we can enjoy low gas and diesel prices going into Thanksgiving and wait and see what OPEC does in December.  At the end of the day, I still can’t believe crude prices fell this far so fast.  I expect the pendulum to swing back up closer to WTI $60/barrel in December.  But for now, sit back and relax.

Local retail prices on gasoline have finally broke through $2.49/gallon.  I expect the price at the pump to continue on the downward trend.  Diesel retail prices are even getting close to $2.99/gallon.  We might see $2.99/gallon diesel in the next week, especially with some farm demand starting to dry up in the Midwest.

Propane prices are slowly breaking away from the crude trade and starting to rise.  We are experiencing colder than normal temps and expecting the cold to continue into December.  Regardless of what NOAA is saying, the weather prediction services that I subscribe to are calling for a potential Polar Vortex showing in December.  I should know more next week.  For now, if you are a will-call customer, please keep a close eye on your tank as most users are going through more than normal this month.  Heating demand is already up over 20% for the season!

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

Best regards,

Jon Crawford – Pres.

Catch A Falling Knife?

Good morning,

President Trump’s plan to keep crude prices low for midterm elections worked perfectly.  He convinced Saudi Arabia and Russia to pump more oil to make up for the sanctions being put on Iran which started on November 1st.  Leading up to November 1st, crude prices started to relax as world demand and possible surplus crude supplies from the US were in question.  Then to put the icing on the cake to insure that prices stayed low, President Trump on November 1st granted eight waivers to countries allowing them to buy Iranian crude.  This action sent prices falling even further.  Now Saudi Arabia, Russia, and the rest of OPEC are very upset.  OPEC countries are mad at Saudi Arabia and Russia for trying to help the U.S. with the Iran sanctions which put prices at risk.  And Saudi Arabi is furious at the U.S. for granting the waivers putting crude supplies into possible greater surplus.  Regardless, lower prices will be here for a little while until the OPEC meeting during the first part of December.  I  expect OPEC to announce supply cuts.  The U.S. made too many moves to help the elections and I fear retaliation.  So for now, enjoy the cheaper prices.  But I wouldn’t hold out that these current prices stay through Christmas.

Local retail prices on gasoline continue to inch down closer to $2.49/gallon.  With the latest price drops, I wouldn’t be surprised if we see $2.49/gallon on gasoline this weekend or early next week.  Diesel prices continue to remain higher now that winter additives are in the price as well increased demand for harvest.  I don’t expect to see too much movement on diesel prices.

Propane prices continue to remain calm.  As I have been saying for months, once we have a demand event or crude turns around, hold on.  Propane is still setup for a nice price jump at some point this season.  If you are a will-call customer, I highly recommend that you fill your tank now.  In addition, if you monitor your own tank levels, please make sure to call us when you are around 30% to give us sufficient time to complete your delivery during the winter months.

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

Best regards,

Jon Crawford

 

Crude Oil: How Low Will We Go?

Good afternoon,

After heavy selling last week, crude oil prices continue to slide this week.  WTI crude prices are set to close below $65/barrel.  On technical charts this puts us into correction and possibly a bear market.  However, I try not to just watch the charts but also the hard data.  The global market is very tight on supply.  Any disruption puts the world supply back into deficit.  The Iran sanctions have just begun.  And right now traders are banking on Saudi Arabia playing nice due to the political fallout from killing a journalist.  I am skeptical at seeing these prices hold much longer.  I am still anticipating a return in WTI prices closer to $70/barrel.  I expect that China and the US will continue to make progress on trade and that the global slowdown being discussed will not come into fruition.

In local retail news, retail prices of gasoline continue to drop closer to the $2.49/gallon threshold.  The economics are not quite there, but they will be soon if the sell off continues.  Diesel prices have continued to remain more stable due to the increased demand for harvest during this time.  In addition, winter blends are starting to be implemented adding anywhere from 3-15 cents/gallon to the cost depending on the additive treatment and blend ratio with #1 ULSD.

Propane prices are remaining stable as we go into winter.  I am still surprised by the inventory numbers released on a weekly basis.  I believe that with a large demand event, propane prices will spike quickly.  All eyes are on the weather forecast which continues to turn more towards a colder winter now than a month ago.  Stay tuned.

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

Best regards,

Jon Crawford – Pres.

Crude Prices Continues to Slide

Good morning,

Crude oil prices continue to slide this week.  WTI crude touched $66/barrel on Tuesday, closing over 11% down in the past two weeks.  Traders have all rung the register and jumped on board believing that Saudi Arabia will make sure that all Iranian crude lost from sanctions will be replaced.  Many feel that Saudi Arabia will deliver on the promise to help diminish consequences over the killing of a journalist.  In addition to the geopolitical climate changes, the world stock markets have been in correction giving strength to a potential slowdown in the economy which is bearish for crude.  I do not feel that crude prices will go much lower.  I feel that at this point the hedge fund money is out of the price.  When you look at the amount of contract positions sold in the past two weeks, the amount purchased in return is minimal.  Therefore, traders are not selling their long positions and shorting crude.  So basically, from a technical standpoint, crude prices are in a “wait and see” pattern until the hedge fund managers enter the market again.

Local prices of gasoline are inching closer to $2.49/gallon.  I expect to see prices continue to fall throughout the weekend.  Diesel prices have not fallen as much due to increased demand for harvest.  Although harvest is going to be very prolonged this year due to the flooding and temperatures, I don’t expect to experience any diesel supply disruptions over the coming weeks.

Propane prices are slowly rising as we get into winter.  The colder than normal October has increased demand.  The major sell off in crude affected propane slightly, but overall, prices are continuing to trend higher.

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

Best regards,

Jon Crawford – Pres.