Arctic Blast Is Over!!!

Good morning,

I hope this message finds everyone safe and sound coming out of the coldest weather experienced in 30 years.  Our company worked overtime and extra hard to keep everyone safe.  If the temperature climbs to over 40 degrees this weekend, it will be an 80 degree swing in 48 hours!!!  Regardless, I appreciate everyone’s patience as we worked in extreme temps to care for our customers.  And a special hank you to the customers who worked with us to help with spreading out deliveries to make sure those in emergency situations were taken care of you.  Your honesty and willingness to help was very much appreciated!

In world news, crude oil prices climbed 18% in January to start the year as I expected.  Crude oil prices were very undervalued to start 2019.  Now we are carving out a range of $50-55/barrel WTI until a few things flush out.  OPEC+ and their crude cuts will be under scrutiny in the coming months.  Mostly we need to see Russia stepping up to their commitments.  China’s economy is continuing to contract so the news is very bearish for crude prices.  But the contraction could bring China to the negotiating table on a trade deal which would be very bullish for crude.  Here in the US we just don’t stop pumping crude.  And the FED is probably deciding to hold off on rate increases which would hope to spark more demand in crude in relation to the devaluing of crude prices.  So February is going to be an interesting month for watching data.  I think after this month we will have a better idea as to where crude prices might be heading.  More to come.

In local news, gasoline prices are starting to pop up above $2/gallon.  I expect to see the trend continue as gasoline cost basis in our area jumped higher this week.  Diesel prices continue to climb as well.  I expect to see diesel prices at the pump continue to rise as well.

Propane prices have remained stable with high production and high demand.  Propane is in a spot of homeostasis.  So if demand erodes or production quits, hold on.  Things could change quickly.  For now, please make sure your driveway is clean and clear to make sure we are able to safely and efficiency deliver propane to your house.

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

Best regards,

Jon Crawford – Pres.

Public Service Announcement: EXTREME COLD

Good morning,

I would like to discuss the EXTREME cold temperatures that are hitting our area for the next week.  The arctic blast from the Polar Vortex is going to hang around for some time.  In addition, we might see snow on Monday.  If you are a will-call heating oil or propane customer, please keep an eye on your tank.  Your consumption will greatly increase over the coming days.  These temperatures are very dangerous so please take caution when being outside.  Frostbite can happen in under 30 minutes with some of the temperatures predicted.  Our drivers are working extra hard to stay ahead of this cold snap.  Please make sure that your driveway is cleared and there is a safe path to your tank.  We want to complete safe and efficient deliveries over the coming week.

As far as prices are concerned, crude oil continues to be volatile.  The biggest news that we continue to monitor are the developments in Venezuela and the US government shutdown.  The potential for lost crude imports from Venezuela could impact the US.  We import about 300K barrels of heavy crude from Venezuela and the loss of that product could push up diesel prices.  The government shutdown continues to put pressure on the economy.  As long as the government opens soon and the Chinese/US trade teams continue to talk, we expect to see crude oil consumption stay healthy this year.

In local news, the crack spreads on diesel in the Chicago market dried up driving the cost of diesel in our market up by more than 20 cents/gallon.  Our cost is now on average with the rest of the East of Rockies markets.  I expect to see diesel prices at the pump rise.  Gasoline retail prices continue to resist breaking back over $2/gallon.  I would expect to see most markets back above $2/gallon in the near future.

Propane prices are starting to creep back up with winter weather causing healthy demand.  However, production is very strong and inventories are high.  So I don’t see any potential for major prices moves higher in propane this winter.

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

Best regards,

Jon Crawford – Pres.

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.

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.