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 Update:

Good morning!
Well, warmer temps are finally on the way. And by warmer I mean at least the 30’s! 🙂 Propane supplies in Wisconsin have been tight but are not at an emergency status. Our neighbors in Minnesota and Iowa are in the middle of a crisis. There is no propane available in those states. There is more than average levels of propane in Conway Cavern storage, but propane can’t be shipped as fast as it’s going out. There is no worry of running out of propane like in 2014. The issue is pipeline and train distribution. Even if there were 500 more semi trucks on the road, the situation would be the same.  Corn drying demand along with an early cold snap caused supplies in Minnesota and Iowa to deplete quickly. Natural Gas companies had to shut off corn dryers because even the Natural Gas companies could not keep up with demand. Corn drying is at a halt in Iowa where there is still 50% of the corn left to dry! Regardless, Crawford Oil and Propane is in good shape. The supply tightness will hopefully start to ease in the coming weeks. Because there is truly no shortage of propane, prices are remaining fairly stable. There is no need to panic that a massive price spike like in 2014 is coming.
In other news, crude oil prices are continuing on their narrow trading path between OPEC talking about cutting, China and the US reaching a trade deal, and the world economies slowing down affecting demand. I still don’t see much of anything happening for crude prices anytime soon.
Local prices of gasoline have gone higher due to a refinery issue at the Phillips 66 Wood River Refinery. Gasoline stocks will be short for some time, hence the higher price at the pump. By Thanksgiving I expect to see prices ease back just in time for the holidays.
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

Crude Continues Sideways Movement

Good morning!

Crude oil continues to trade sideways on a lack of hedge fund positions in the market place.  Crude markets are very soft on long positions.  Traders are continuing to believe that economic headwinds will deteriorate crude demand next year.  The only possible bullish headlines moving crude right now are coming from OPEC saying they might consider deeper cuts next year.  However, most of the talk from OPEC is just talk, so the news is only keeping a lid on crude prices, not moving them higher.  As the US looks at impeachment and a trade war, England/Europe at Brexit, ceasefire between Turkey and Syria began, and China at a trade war and Hong Kong unrest, I don’t see a lot of potential out there to pop crude prices higher.  For now, I expect crude to remain narrow and calm through the end of year until the OPEC meeting in December.

In local news, harvest demand finally hit the Midwest and the glut of diesel fuel out of the Chicago market started to deplete.  Diesel prices jumped almost 15 cents/gallon in two days.  I expect to see retail prices on diesel increase in the coming week.  Gasoline prices have remained steady with crude as supply has been meeting demand.

Propane prices moved a bit higher but not much.  Corn drying demand is now moving and cold temps are sticking around.  I expect to see propane prices slowly move higher if the end of year stays colder than normal.  However, if crude prices fall off a cliff, with how much propane is still in inventory, propane prices will be hard pressed to not move lower with crude.  Time will tell.

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

Best regards,

Jon Crawford – Pres.

Softness In Chicago Market

Good morning,

Headlines around a softening economy and lower refinery runs continue to weigh on crude prices.  Economic data is starting to spoke investors as they continue to move money out of long positions on crude.  WTI is looking to close below $55/barrel this week.  Many firms are lowering outlook for crude prices into 2020 as well.  History shows that crude prices tend to stay low during election years as well.  As conditions in Syria hold some Middle East tensions, OPEC continues to say they will cut production to keep prices from falling off a cliff.  Considering that the next meeting is not until December, I believe OPEC is scared that crude prices could fall through a trap door and collapse.  For now, I think WTI crude prices will remain under $60/barrel for the remainder of the year and have a long ways to go before stars align to pop the price out of its current trend.

In local news, Chicago refinery markets are out of refinery maintenance mode and flush with product.  Retail prices on gasoline and diesel continue to soften.  I expect to see prices at the pump continue a slow downward trend.

Propane prices have leveled off for now as demand is starting to kick in.  I think you will see propane prices start to move higher next week with continued cold and crop drying demand.

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

Best regards,

Jon Crawford – Pres.

Crude Trying To Find A Floor

Good afternoon,

Crude oil prices dropped dramatically this week as Chinese/US talks looked to stall.  In addition, the impeachment proceedings and the looming talks around a recession continued to put downward pressure on crude prices.  However, by the end of the week there was a missile attack on an Iranian crude ship, OPEC announced that they will probably cut more crude in 2020, and Trump said that China trade talks are moving along just fine.  Crude prices found some great support to end the week and ended up about where we started the week.  WTI crude continues to stay under $55/barrel which is very low.  The EIA revised their forecast for WTI prices next year to remain around the same price as today for another year.  If so, cheap energy can continue to try and keep the economy afloat.

In local retail news, gasoline prices continue to remain under $2.49/gallon and diesel prices are capped under $2.90/gallon.  Harvest is slowly starting and talks of tight diesel supply are starting to bubble up.  If so, I could see a price spike in diesel depending on the demand during harvest. As of now, with how wet everything is, we expect harvest to be long and slow.

Propane prices found support as an early cold and wet October is showing greater heating demand as well as high demand for crop drying.  Board prices have increased and I expect to see maybe another increase next week.  It is still not too late to lock in your heating price for this season!

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

Best regards,

Jon Crawford

Crude In Bear Territory

Good morning,

Crude oil prices continue to inch back into bear market territory.  At the current rate, WTI crude is poised to fall through $50/barrel.  This is only three weeks after an attack on the world’s largest oil refinery!  Saudi Arabia claims to be back in full production and the rest of OPEC and Russia are concerned about the possibility of surplus crude entering the market in 2020.  In addition, the issues with the US/China trade war are feeding into concerns on world oil demand.  The rest of the world is taking pause and watching.  Overall, crude demand in the US is very strong, so it’s a bit of a market play than fact.  But time will tell.  If a trade deal is completed, hold on to your seats because crude prices will bounce higher!  For now, crude prices are in check as many money managers have exited long positions on crude going into Q4.

In local retail news, gasoline retail prices continue to remain under $2.49/gallon and diesel prices remain under $2.89/gallon.  I believe gasoline prices will continue to hold, but diesel supply in Central Wisconsin is very tight and I expect to see diesel prices go higher in October.  Once harvest kicks in, we could see a spike on diesel prices at the pump.

Propane prices are holding pattern with crude.  Until propane experiences a demand event, there is just not a lot of movement.  I know some people are concerned that their contract price is higher than the board price today.  Remember that a contract provides you with upside price protection.  We are very early in the season and have a long way to go before a heating cost average will carve out.

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

Best regards,

Jon Crawford

Crude Gains Erased

Good morning!

WTI crude prices are now lower than were before the attacks in Saudi Arabia.  Saudi Arabia is claiming to be back to 75% production and will be at full capacity within a month.  Saudi Arabia struck deals with other countries to cover all their customer contracts during this time.  In addition, with impeachment proceedings looming for Trump, the demands side of crude economics was pulled back to front and center.  Coupled with political news, Chinese trade talks stalled and the market rally took pause along with an easing in crude prices.  This week, the US petroleum inventory report showed a surprise build in inventories with low production runs.  Basically, an attack on the world’s largest oil refinery is still not enough of an event to shake the supply/demand dynamic in the crude market.  Demand is very unstable and production is at record highs.

In local retail news, gasoline prices have calmed down from the jump two weeks prior, but diesel prices will continue to remain high moving forward.  There was a discount on diesel coming out of the Chicago spot market for the past month, placing our cost in Wisconsin about 20-30 cents cheaper than our neighbors to the east.  The glut of diesel has dried up, and prices skyrocketed.  I expect to see diesel retail prices hold where they are at for some time, especially with high harvest demand on the horizon.

Propane prices are slowly inching up.  Although retail spot prices are cheaper than contract, winter fundamentals and potential massive corn drying demand will hit the markets next month.  I am predicting propane prices will jump in October.  How much higher, will depend on crude prices.  For now, you can still contract propane for the heating season.  Feel free to discuss your options with us!

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

Best regards,

Jon Crawford

Roller Coaster Repeat

Good morning!

Crude prices pressed “repeat” again this week with supply and economic news driving the volatility.  We started the week off with Brexit drama, Iraq announcing that they pumped more oil than they should have, and Iran saying they will breach all parts of the nuclear deal.  Prices dropped hard.  Then OPEC comes out after a new Saudi Oil Minister was named saying that they will do whatever is necessary to keep prices high leading into the Aramco IPO.  Iraq followed saying they will behave and do better on cuts moving forward.  Even Russia said they would work with the US on crude prices which is unheard of!  The news cause prices to spike higher.  Then on Wednesday, inventory numbers on crude levels displayed large draws coupled with strong economic data in the US causing prices to spike even higher.  But then in the afternoon, Trump fired John Bolton, the biggest Hawk on Iran, and said he would consider waivers on Iranian crude exports to get them to the table for negotiation.  Crude prices turned and fell off a cliff.  Then on Thursday the IEA announced that world supply would probably go into major surplus in 2020, causing prices to continue the fall.  And finally, today economic data on the US was strong and US/China trade relations showed movement to the positive with each country giving in a bit.  The US will not enforce new trade tariffs, and China will lift the agricultural purchasing tariffs and buy soybeans.  The news gave support to crude prices and stopped the fall.  So WTI crude price ended where it started at about $55/barrel.  What a ride the past weeks have been for crude prices and I don’t see it stopping anytime soon.

Retail prices on gasoline continue to stay very low.  Prices on regular gasoline are ranging between $2.34-2.44/gallon based on major price differentials currently between suppliers.  Diesel prices are also remaining very stable going into harvest season.

Propane prices are slowly starting to creep up, but nothing too scary.  Propane is trading based on crude movement.  We are still at historically low prices of propane with historically high volumes of inventory.  We do not expect to see prices rising until October 1st when winter tariffs kick in and harvest demand starts to take shape.  If you have not contracted your volume for the heating season, you can still do so.  Please call our office to have your tank filled and we can prepare a contract for you.

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

Best regards,

Jon Crawford