Crude Slide Continues

Good afternoon!

Crude oil prices continue to remain weak and received very little support from events that unfolded.  Even though US and China struck a “light” trade deal, crude did not respond positively.  The deal is not seen as changing the world economic environment.  Basically, most see the phase one deal as a “stop measure” from the situation getting any worse.  OPEC also released information that even with the purposed crude oil cuts, crude production will beat demand.  This news is very bearish and tracks as the US officially hit a new production record of 13M barrels/day.  Gasoline and diesel stock inventories rose again this week.  And even though exports are strong, petroleum productions continue to be ample in supply.  Overall, the outlook for crude prices is very bearish and this is on the heels of a potential conflict with Iran only two weeks ago!

Gasoline and diesel retail prices dropped a bit this week.  We are seeing about $2.39/gallon on gasoline and $2.84/gallon on diesel fuel.  I don’t expect to see much change on prices at the pump.

Propane prices dropped again this week.  Propane is very bearish.  Supplies are at national record levels and the lack of demand is making it worse.  I don’t expect to see any major blow out in propane prices this season.  For right now, we are waiting to see if winter will ever stick around!  Even with the recent cold snap, nothing looks to ever stay longer than a couple days.

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

Best regards,

Jon Crawford

Craziest Week Ever…

Good morning,

Well, I think this might be the craziest week with crude prices I have ever experienced.  President Trump issued the order for the execution of General Soleimani from Iran in Bahgdad on January 2nd.  The drone attack caused crude oil prices to sky rocket.  Iran threatened retaliation and Trump responded with further attacks if Iran killed any more Americans.  The escalation in the Middle East pushed WTI prices to the highest level since April 2019 when Iran attacked Saudi Arabia’s oil refineries.  Then on Wednesday, Iran launched rockets into Iraq targeting bases that housed American soldiers.  As we feared for the worst, we were told that no American lives were lost.  Trump gave a speech declaring that Iran announced the rockets were the retaliatory strike and no more attacks would be issued.  Trump considered the escalation diffused.  Then something strange happened.  Crude oil prices sold off at a greater volume prior to the attacks and are now sitting below $60/barrel and continuing to find weakness.  The US executed an Iranian general, Iran launches rockets at American bases, and crude prices go down.  Never before have we experienced this type of fluctuation based on the events.

This week shows how oil production in Russia and the US have taken away much of the risk premium in the Middle East.  We were on the brink of potential conflict with Iran and oil prices only rallied 5% and now sold off more than 6%.  The incident really displayed the new world we live in with crude oil production.  Production is incredibly strong and no major supply hurdles are on the horizon.  Therefore traders are shrugging off the Iran conflict, just like the Iran attack on Saudi Arabia.

In local news, gasoline prices and diesel prices continue to move around with crude price fluctuations.  Gasoline retail prices are averaging 2.44/gallon across the state and diesel prices are averaging 2.84/gallon.

Propane supply continues to be very high and the warm temperatures are not helping demand.  I do not see any issues for supply problems coming from our main storage facilities in the US.  As of right now, we are about to experience the most propane in inventory for January in our nation’s history.  If crude prices continue to fall and the weather stays warm, I would expect to see softer propane retail prices and good prices for next year as well.

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

Best regards,

Jon Crawford

Happy New Year and Best Wishes in 2020!

Happy start to 2020!

I hope everyone had a great holiday season and enjoyed a safe and fun New Year celebration.  2019 was a wild year for crude oil and the energy markets.  I expect more of the same in 2020.  The big events we will be watching in 2020 are economic growth in China and the US surrounding trade agreements, growing unrest in Iraq/Iran/Syria, the FED making any changes to monetary policy, OPEC+ holding to their proposed production cuts, and the US ability to continue at current production runs.  Needless to say, there are a lot of factors to be watching in 2020.  And if anyone had a crystal ball to call crude prices correctly, I would call them lucky! 🙂

For what it’s worth, the year of a presidential run usually leads to lower energy costs.  This is a pattern of the past that seems to hold true.  Therefore, I’m not calling for any major upside risk in crude prices in 2020 at this time.  Now this is based on all the above scenarios playing out correctly.  I do believe the world economic growth will maintain but nothing major in calling for more crude oil demand.  I believe that unrest in the Middle East will stay contained as Iran knows the US election is coming.  The FED will not throw any major wrenches in the mix, at least not enough to chart a new course for crude prices.  OPEC+ will argue over production cuts and I do not think that Russia and others will maintain their proposed cuts.  I also think that US production will be capped at around current levels.  If the US production falls, I definitely see Russia jumping in to pick up that market share.

Therefore, in my opinion, I don’t see any urgency in locking in prices for 2020 at this time.  I will continue to update as we move into the new year.  I’m excited for 2020 and looking forward to challenges and opportunities.  I wish all the best to everyone and hope that 2020 brings prosperity, enjoyment, and lots of laughter!

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

Best regards,

Jon Crawford

Merry Christmas and Happy New Year!!!

I hope everyone had an enjoyable Christmas yesterday.  Just wanted to take a moment and wish everyone a safe and Happy New Year!  Thank you to all our customers in 2019.  We have the best customers around and enjoy working hard to ensure the best possible customer experience!   We hope 2020 is full of laughter and success!

From everyone at Crawford Oil and Propane

WTI Crude Approaches $60/Barrel

Good morning!

I hope this message finds everyone well and ready for the weekend.  Crude prices went on the positive this week on news that the US/China were going to FINALLY complete a major trade deal.  The news, like usual, sparked a rally on crude and the stock market.  Details of the possible deal included no new tariffs on China and relief on previous tariffs. WTI Crude was JUST about to break through $60/barrel when the news came that the current 25% tariffs on China will remain, however, no new tariffs will be applied.  The news cooled off the crude market.  WTI struggles to find the footing to leg higher above $60/barrel.  Even the FED chimed in this week and said that they are planning on not raising rates which make crude prices go up.  For now, it’s looking like crude prices are going to stay in a narrow range below $60/barrel.

In local retail news, gasoline and diesel prices are all over the map.  Some markets are $2.49/gallon on gasoline and others within 15 miles are $2.19/gallon.  The spreads are ugly and some markets are losing money.  Diesel prices are all over the map as well depending on whether the diesel is treated for winter or not.  Don’t let cheap diesel prices fool you!  The retailer might not be blending for winter and we are finding that treatment is already needed on these single digit nights.  Make sure to ask your local gas station how they are treating their diesel.

Propane supply has rounded the corner and getting much better.  Prices have stabilized as well.  We appreciate everyone’s patience over the past two months as we navigated one of the worst supply crunches since 2014.  Our company has already made changes based on the experience this year to gain access to even more product during a possible supply crunch in the future.  Anytime there is a major incident, I try to find the positive and improve.  Please make sure if you are a call-in customer to call when your tank is above 30% to ensure an efficient delivery.

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

Best regards,

Jon Crawford

OPEC+ Agree On Production Cuts

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

PROPANE UPDATE:

Good morning!

I hope everyone has a safe and enjoyable Thanksgiving!  Good news yesterday, as the Teamsters and CN agreed to a tentative deal and workers returned to work last night.  We are not out of the woods yet, but now we have a target and some light at the end of the tunnel.  We expect supply to be tight for the next few weeks as rail shipments get caught up.  But with allocations resetting in December we feel that the potential for a December disaster is starting to subside.

Crude prices rallied this week with hopes of a China/US trade deal.  In addition, OPEC+ is talking it up that supply cuts will continue.  I believe that the rally is a little premature.  I’m not too concerned with crude prices breaking out much higher.

Retail prices of gasoline and diesel will continue to rise as costs increased this week.  We believe that once again this might subside after Thanksgiving.

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

Best regards,

Jon Crawford

PROPANE SUPPLY UPDATE:

Good morning,

Well, the propane distribution logistics were finally starting to see the light at the end of the tunnel, and then the CN Railroad in Canada went on strike Tuesday.  CN ships all the rail propane into Wisconsin.  The strike is not over yet but making progress.  If the strike continues through next week, Wisconsin is going to be in trouble.  Enterprise and Oneok pipelines are finally starting to flow a little better now that corn drying is starting to get over the hump.  We were actually looking at getting back to normal by December until the CN strike was announced.  Seems like as soon as one issue is solved, another pops up.  For now, we are grateful for warmer temps and shorter weeks with holidays coming.  If the strike ends over the weekend, we will be able to breath a bit.

Crude prices jumped higher with some additional unrest in the Middle East and the announcement of a possible China/US trade deal.  However, any further movement higher has been tempered with skepticism on a true deal with China.  I continue to see WTI crude trading in a yo-yo pattern between $55-58/barrel until after the OPEC meeting in the beginning of December.

Retail prices on gasoline and diesel moved slightly higher this week with the upward movement in crude prices.  Inventories are in good shape.  I don’t expect any major blowouts in price before Thanksgiving Day travel.

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

Best regards,

Jon Crawford

Cold, Cold, and More Cold

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

No Propane Emergency

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