Be Safe and Be Well

Good morning,
 
I just wanted to reach out and wish everyone a safe weekend. I know that days are very difficult for many people right now. All of our lives are turned upside down and fear of the unknown grips many of us daily. I know that I have had my many moments over the past two weeks.
 
Please know that our company is doing everything in our power to be safe and be able to deliver products through this difficult time. We are doing our daily best to support each other within our company and our families at home as well. We are also doing our best to stay isolated outside of work to ensure the lowest possibility of spread within the community and our company.
 
If you have any questions, comments, or concerns, please feel free to reach out to us.
 
Once again, be safe and be well!
 
Best regards,
 
Jon Crawford

COVID-19 and Russia

Good morning,

The markets have been on the most volatile roller coaster possibly since 2008.  Crude oil prices have traded in a range of over $6/barrel all week.  The main driver has been the potential for demand destruction with COVID-19.  As prices fell this week, the FED  made a surprise announcement to make an emergency cut to interest rates, the most since 2008.  The announcement sent WTI crude prices higher for a bit but leveled off around $47/barrel.  OPEC yesterday announced an emergency cut of additional 1.5M barrel/day production cut which sent prices much higher for the day.  OPEC is trying anything to keep prices from falling off a cliff.  But the markets calmed after learning that Russia might not agree to the cuts.  This morning, Russia announced they will not comply with the proposed cuts to production.  WTI broke through the support level of $45/barrel and fell lower to $43/barrel on the news.  Basically, we are in a cycle that no matter what anyone tries to do, COVID-19 rules the day and all markets believe we will experience the worst pullback over the next few months probably since 2008.  In addition, COVID -19 could return in the fall with vengeance, which is why the race to a vaccine is so important to stabilize the world wide fears.  For now, regardless of how these situations turn out, we are preparing for lower prices on crude for longer.

Retail prices on gasoline and diesel moved lower this week along with the markets.  If we do not experience any positive news with COVID -19, I could see retail prices on gasoline fall below $2/gallon.

Propane prices are not being affected by these markets.  Propane is working on strict fundamentals for the moment.  There is a lot of propane in inventory, and prices just can’t go much lower or the product will be burned off through the petro-chem facilities.  For now, we can enjoy lower propane prices probably for the next year.  In addition, winter is winding down.  At this point in time, we are currently 10% colder than the warmest winter on record, but 10% warmer than last year’s winter.

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

Best regards,

Jon Crawford

Market Bloodbath

Good morning,

The spread of the coronavirus has taken all markets by storm and entered into correction territory.  No matter what any true market conditions are appearing, the markets have sold off at the highest capacity in one week since 2008.  Crude prices are down to over four year lows.  The massive sell off is creating potential future buying opportunities, but no one knows how long this could last.  For right now, it’s sit back and watch the falling knife.  However, I would like to point out, that in my opinion, there are some signs of supply tightness in the diesel market and no matter how low crude prices go, diesel might be starting to form a bottom.  Little early to call, but it’s something I am watching.

Local retail prices are not able to fall fast enough.  I expect retailers will slowly lower prices to make up for losses on the last run higher.  At the rate we are going, gas prices below $2/gallon are not out of the question in the coming week or so.  Diesel prices will also continue to come down.  At this point, we are at the potential for the lowest cost on diesel for planting season in many years.

Propane prices have not followed along with crude in the bloodbath sell off.  Propane prices are bouncing along a bottom sweet spot.  If they go any lower, the petro-chem companies will buy up everything in inventory, and I mean everything.  So traders are not throwing in the towel just yet.  However, I can safely predict that I believe next year’s heating contracts will be lower than the current year without some massive change to inventory.  As we go into the end of our current winter, we are looking to complete the second warmest winter in 10 years.

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

Best regards,

Jon Crawford

Crude Prices Continue Volatility

Good morning,

Crude prices rallied this due to draws in US inventory levels and OPEC commitments to cuts.  In addition, the US put new pressures on Russian oil companies after discovering that Russia was helping Venezuela escape US sanctions.  Also, a refinery fire in the Gulf caused Chicago spot markets to rally due to increased need for supply.  Crude prices and spot markets were set for a good weekly gain until this morning.  Today the coronavirus took the major headlines as the virus continues to spread and might not be as contained as the WHO concluded earlier in the week.  Crude prices tanked to start the day Friday bringing spot cash prices for refined fuel down with it.  So for now, the coronavirus is the new “hot headline”.  Whatever announcement hits the news each day seems to drive the market.  Volatility is back on big time in the crude trade.  Many hedge fund managers exited crude positions over the past few weeks and not many are reentering with these conditions.

Spot prices in Chicago jumped this week and I expect to see prices at the pump increase for gasoline.  Diesel prices were not affected as much.

Propane prices found some support with cold weather and high exports.  Also, there are discussions around the petrochem companies along the Gulf Coast buying into propane at these lower prices.  If the petrochems buy in, we could see the massive glut of propane decrease quickly.  For now, lower prices will continue but I don’t expect to see the bottom fall out.

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

Best regards,

Jon Crawford

Coronavirus and Warm Temps

Good morning,

The coronavirus continues to put downward pressure on crude prices.  WTI crude is holding near $50/barrel which is the lowest in almost a year.  OPEC+ is meeting early to try and convince everyone to pump less oil until the coronavirus is contained.  Russia is disagreeing to the terms and believes that nothing should be done until the coronavirus is further studied.  If Russia pumps less oil, the US will take the market share and Russia is not ok with that happening.  The US continues to pump at record levels and is not looking to slow down.  To try and help keep the steam in the economy, China announced slashing tariffs on US goods in a couple weeks.  China knows the coronavirus is going to slow things down a bit, and if anything, the virus is forcing the two countries to talk more about the trade dispute.  For now, we are seeing a floor carve out on oil prices.  I believe we will trade in the $50-55/barrel range on WTI until further notice on the coronavirus.  I believe that if a cure is found and the virus is contained, WTI crude will jump $5/barrel.  However, until real economic slowdown occurs, I don’t think traders are going to give up much more on crude prices.  For now, it’s a day-to-day move with the news cycle.

In local retail news, refined products have softened once again, so I expect to see retail prices on gasoline and diesel hold around their current levels for some time.

Propane prices have also softened with record warm temperatures.  The US actually experienced a BUILD in national inventory last week, when last year at this time it was a record drop!  We are looking at ending the winter with as much in inventory as we sometimes have to start winter!  I think that propane values are very attractive and I see very cheap prices on the horizon for the rest of this year and next winter.  So for those who heat with propane, hopefully you can keep more money in your pockets for 2020 and 2021!

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

Best regards,

Jon Crawford

Coronavirus and Groundhog’s Day

Good morning,

Well, the coronavirus is not getting any better.  In fact, the virus has now infected 15k people and killed over 300.  The first death outside of China was reported, and a few major US cities are reporting cases.  China built a giant hospital in nine days (yes, nine days) to have beds on hand ready to treat.  For now, the markets are very nervous.  China is shutting down factories, US companies have closed operations, and travel/shipments are starting to stop.  The virus could cause the world economy to grind to a halt while contagion is contained.  With demand erosion on the horizon, crude prices have tumbled.  WTI crude briefly traded below $49/barrel for the first time since last spring.  OPEC+ is already planning an emergency meeting to try and keep crude prices from falling off a cliff.  The US would actually not want prices to go much lower in order to keep production high and taking market share.  For now, it’s time to sit back and relax until we know where we are heading with the coronavirus.

Local prices of retail gasoline and diesel continue to fall.  Retail gasoline prices have fallen below $2.29/gallon and retail diesel prices are in the $2.70’s.  I don’t expect to see prices move any higher in the coming weeks.

Propane prices continue to stay soft with warmer than average temperatures and high volumes of supply.  As always, we like to have fun with our local groundhog, Jimmy The Groundhog from Sun Prairie.  Jimmy did see his shadow on Sunday, so for what’s it worth, Jimmy is saying we will have six more weeks of winter.  The forecast is continuing to call for average temperatures.  For now, I think it’s safe to say that a major polar vortex is less likely to occur this year compared to years past.

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

Best regards,

Jon Crawford

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

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 Holds Above $60/Barrel

Good morning!

Happy Friday!  So WTI closed above $60/barrel this week and held.  The move higher is being mostly blamed on sentiment and not fundamentals.  In addition, trading volume is light at the end of the year, so I have caution that this will hold into 2020.  All eyes are on trade deals, the FED, and end of year economic data.  For now, I always tell people to close their eyes, enjoy the holidays, and we will revisit after New Year’s.  🙂

In local news, gasoline prices continue to have a wide range across the market.  Retail prices on gasoline are ranging from $2.19 – 2.59!  Diesel prices are holding steady below $3/gallon and I expect to see that trend continue.  Hopefully we will see these lower prices through the holiday travel season.

Propane prices dropped off a bit with ease in supply problems.  In addition, warm weather is on the horizon which is putting a lid on price increases.  Propane prices are truly following the price of crude, but supply fundamentals are keeping propane in check.  If you are a will-call customer, please make sure to call when your tank is around 30%.  We are very busy this time of year and we want to ensure efficient delivery to your home.   🙂

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

Best regards,

Jon Crawford – Pres.