The Bears Are Still Trying

Good afternoon!

I hope this message finds you well. The bears in the crude oil trade are trying to move the floor price below $90/barrel. But they failed to accomplish the job, in spite of strong bearish sentiment and news. The dollar continues to gain strength which increases the purchasing power for crude oil. The action usually lowers the price of crude on the market. In addition, the amount of savings in the hands of consumers is dropping fast. Student loan repayments are beginning. And inflation is starting to sting in many areas of the economy. And China is still struggling with their commercial real estate problem. However, Saudi Arabia and Russia remain lock-step in limiting crude oil and refined supplies to the market. And the US reserves of crude oil continue to drop to lowest levels in years. As demand for crude oil in the US ramps up with the harvest, suppliers and refiners are remain disciplined and not oversuppling the market at home. The actions of world oil producers and the US oil industry are winning the battle between the bears and bulls. Therefore, even though the world economic data was awful this week, WTI crude oil still closed above $90/barrel to finish the week.

Diesel prices out of Chicago started to move higher as differentials changed in cycle timing. Although Chicago is still cheap for diesel in comparison to other spot markets, I am still betting that harvest is going to cause diesel inventories to drop and prices to rise. Gasoline continues to be very long in the market and remains trading flat-to-down. I don’t expect to see any major jump in gasoline prices anytime soon. Even though diesel prices rose this week, I remain firm on my recommendation to keep your diesel tanks full.

Propane continues to trade in a narrow range. The heating season is officially underway, although it doesn’t feel like it! I expect propane to move higher as the winter goes along. Producers of propane are sounding alarms loud and clear that they just won’t sell propane for much cheaper than the current trading price. Keep-fills have started and before we know it, the weather will be cold and the holidays will be here! Enjoy the hot weekend while you can!

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

Best regards,

Jon Crawford

Hold Steady

Good morning!

Happy Friday! I wish I had positive news to report, but this week was a “hold steady”. WTI Crude Oil prices maintained a floor of $90/barrel. I do believe that traders are going to try and push crude prices to $100/barrel by the end of the year. With the current capital gains structure, traders can ring the register as close to $100/barrel and pay a “known capital gains tax”. Everything surrounding taxation could change when the “Trump Tax Cuts” run out. There has been support for crude prices around the world to remain strong as well. Japan continues to provide stimulus to their economy. China continues to work hard to push their economy forward. India’s economy is strong. The United States economy also looks like a “soft landing” from FED policy is possible. In addition, Russia announced cuts to exports of gasoline and diesel into the world market to help support the current price of crude oil. In other words, the world economic sentiment has strong support for higher crude prices. But a recession in 2024 is a very real possibility. However, I continue to sound the horn that if recession hits, all major oil producers will cut production to keep prices higher. As I’ve said for the past few months, I believe that WTI Crude will trade in a range of $70-80/barrel for a long time. When crude prices hopefully drop at some point towards the end of the year when traders “ring the register”, the drop in price could be a possible futures buying opportunity depending on how far the price falls.

In local news, gasoline prices continue to trade in a narrow range. Gasoline supply looks to be long in Chicago. But diesel prices are still primed to jump 30-40 cent/gal at any point. If you are a bulk diesel purchaser, I highly recommend keeping your tanks as full as possible. The jump in diesel price is not a matter of “if” but “when” and the jump will happen quickly.

Propane prices continue to trade in narrow range as well. Summer allocation building ends in September. I expect a small bump higher in price starting in October due to the fundamental change to winter spot pricing. Regardless, propane prices continue to be cheaper than last year which is incredible considering the massive inflation inflicted upon our economy. There are small potentials for propane price blow outs this winter depending on weather. But supplies are healthy and logistics will be the only issue to deal with this winter.

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

Best regards,

Jon Crawford

All Sights On $90/Barrel WTI Crude Oil

Good morning and Happy Friday!

I hope this email finds everyone ready for the weekend. This week WTI Crude Oil price pushed through $90/barrel for the first time since November 2022. The US economy possibly experienced increased inflation in August, but the cause was mostly due to increased cost in of gasoline as summer finished. The world economy is looking healthy and the potential for a soft landing continues to win out on the news airwaves. In addition, as I’ve said all along, don’t bet against China. China had some commercial real estate issues and a slower than anticipated reopening GDP which caused a panic sell-off in crude late spring. China instituted a full bailout for the commercial real estate and added further stimulus to the economy. Within one month, China is seeing an increase in GDP and their stock market is roaring higher. World demand for crude continues to be strong and the US crop harvest looks to be a fast harvest which puts supply pressures on markets to stay wet with refined products. The supply pressure in turn supports crude oil prices, pushing them higher. I am still convinced that $80/barrel is the new floor for WTI crude and any dip in price below $80/barrel is a great futures buying opportunity. For now, we just sit back and let the market do it’s thing.

In local news, our neighbors to the west are finally calming down on as harvest is on the down slope. However, Chicago Spot is so heavy with diesel that an increase in cost of 30 cents per gallon could occur at any moment in our market. My advice is to keep all your diesel tanks full. It’s not a matter of IF diesel prices in our market skyrocket higher, it’s a matter of WHEN. And I believe the blowout will happen within two weeks. I think when the futures October contract expires at the end of this month, we better strap on our seatbelts for a roller coaster in volatility in the Chicago Spot Market. Gasoline prices have continued the slow grind higher so I don’t expect to see retail prices of gasoline go down at the pump anytime soon.

Propane prices have climbed higher and retail prices have followed. Our board price is getting closer to our contract price to start the winter, even though we have a record level of inventory of propane in the US. I believe higher crude oil prices will continue to support higher propane prices all winter long, especially if the winter is warmer than average.

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

Best regards,

Jon Crawford

What A Mess…

Good morning!

Happy Friday! WTI Crude prices continue to slowly grind higher. China announced a financial plan to bail out the failing commercial real estate problem. The announcement caused all commercial real estate stocks in China to soar over 75%. In addition, Saudi Arabia announced that they will keep their voluntary additional crude production cuts to 1M barrels/month until the end of the year. Then, in a surprise to everyone, LNG employees in Australia announced a strike which will put pressure on nat gas production globally. Without an increase in crude harvesting, opening up new nat gas production will be difficult. And then fall is here in the US, so harvest is starting. Demand for refined products is skyrocketing across the US which is supporting crude prices as well. And the US economy is trending towards a soft landing rather than a recession. Overall, I do not see any signs pointing to a bearish scenario for crude prices in the months of September or October. I still am holding my call that $80/barrel WTI crude oil is going to be the floor price moving into 2024. In 2024 there are possibilities of some occasional dips in price below $80/barrel presenting some futures buying opportunities. But I don’t see any long-term scenarios holding WTI Crude price below $80/barrel.

In local news, refined products east of the Rockies is an absolute mess. Refineries are down for turnaround and one in particular has been down much longer than anticipated. As harvest begins in the western states, east of Rockies, not enough gasoline was put into inventory and supplies are pinched tight. The price of gasoline in the Spot Group Market shot up over $1/gallon in comparison to the Spot Chicago Market. The blowout caused trucks from Minnesota and Iowa to flood Wisconsin terminals. Therefore, WI terminals have been forced to raise prices to protect product promised for WI contract customers and keep out of state trucks away from WI. In addition, terminals have run out of product and allocations have been put in place all over the state. I expect to see prices for gasoline and diesel increase in WI for the next two months. In addition, finding product will be extremely difficult for distributors as terminals temporarily run out of products. Logistics for supply will be a nightmare. The good news is that we have dealt with this type of scenario many times before and Crawford Oil is positioned very well to survive through the struggle. We will make sure that all our customers receive their deliveries.

Propane prices continue their slow grind higher as crude prices increase. Although our retail price for propane has increased, you can still save some money ordering a fill now and contracting your remainder of gallons for the heating season. Feel free to call our office for more details.

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

Best regards,

Jon Crawford

Happy Labor Day Weekend!

Good morning!

Happy Friday! I just wanted to take a quick moment and wish everyone a safe and fun-filled Labor Day weekend! For those traveling, I hope the traffic is not too bad. 🙂 Not much changed in the marketplace this week so we will get back to regular updates next week.

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

Best regards,

Jon Crawford

China Doom and Gloom Affecting Crude Prices?… Not Just Yet.

Good morning!

Happy Friday! WTI crude prices took a little hit this week. China released less than stellar economic data, cut interest rates, and stopped reporting youth unemployment which has been at all time highs. The news caused crude oil prices to tumble and fall below $80/barrel for a brief second. But the strength of the US economy, the decreasing oil rig count in the US, and the cooperative discipline from OPEC+ to keep production cuts steady continue to support the narrative of tightening world crude oil supplies. In fact, regardless of China’s economy, crude producers seem to be in lock-step keeping production low in order to prop up prices and avoid a massive collapse. As I have been writing, I believe $80/barrel WTI to be the “new norm” moving forward for quite some time. Yes, we might have some dips below $80/barrel. But the timing will be brief as traders hedge bets at those prices which in turn prop prices right back up to $80/barrel. I also believe there is potential for upside price in WTI crude to breach $90/barrel. But for now, we should all start accepting the reality that current crude oil prices will probably remain the new norm regardless of what happens in the world economy.

In local news, diesel spot prices have come down from their highs. Diesel supplies in the US are still very tight and any major disruption in refining prior to harvest could cause a massive increase in diesel prices east of the Rockies. Most people in the industry are keeping their fingers crossed that the harvest is mostly completed before any hurricanes potentially affect Gulf Coast production. Gasoline prices have fallen a touch from their peaks as well. But again, as long as crude oil prices remain strong, both gasoline and diesel prices will hold firm.

Propane prices remain steady going into end of the summer. Although supplies are very high in the country, the appetite for exporting and Canada keeping more propane in house for manufacturing, prices will probably start to climb in Q4 of this year. If we have a mild winter, I also believe suppliers will increase their margin index to make up for lost volume. The action from suppliers will in turn raise the retail price of propane. I highly recommend topping off your tank by the end of September. We are being very liberal with our summer fill volumes.

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

Best regards,

Jon Crawford

$80/Barrel WTI the New Price Floor for Crude Oil?

Good morning!

Happy Friday! WTI crude oil prices held above $80/barrel this week. OPEC+ confirmed Saudi Arabia’s announced production cuts of 1M bpd happened in July. In addition, the IEA increased their outlook on crude demand for the end of year and into 2024. The US seems to be experiencing a softer landing around inflation which will continue to fuel demand for more crude oil. Producers seem to be determined to try and keep oil prices as high as possible. I believe that the world economies can survive at $80/barrel WTI. Therefore, I don’t see any incentives for a producer to go after market share by flooding the market with crude oil and collapsing price. Although the war in Ukraine is a wild card, the US Presidential election is coming next year and many voters are starting to rank ending the war in Ukraine as a top priority. So politics at home could play a major role in how the US government continues to send money to Ukraine. I would have to write for now that crude oil prices are nicely supported and I don’t see too many headwinds besides a complete collapse in the Chinese or American economies. But both countries have tools in the toolbox to heed any major recession.

In local news, diesel spot prices continue to be volatile as harvest approaches and two major refiners are going into maintenance mode. I could see diesel prices at the pump blowing out higher this fall for a brief period of time. Gasoline spot prices continue their slow burn higher. I expect to see gasoline prices peak towards end of summer. However, prices of gasoline could remain higher if refiners choose to produce more diesel due to the potential tight diesel market in the fall. The next few months will be very interesting in our local spot market.

Propane prices have followed crude oil prices higher. Spot prices have moved almost 20 cents/gal higher from the bottom. I recommend everyone to top off their propane tanks now and contract for the upcoming heating season. It’s hard to believe that colder temperatures are right around the corner!

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

Best regards,

Jon Crawford

Seat Belted For $80 WTI Crude Oil?

Good morning,

Happy Friday! WTI crude oil prices went ripping higher even though the FED raised interest rates to the highest in over 20 years. Inflation is finally starting to cool but demand seems to be strong and producers continue to be vigilant in limiting supplies. WTI crude prices are almost touching $80/barrel which has not been seen since last year. Unfortunately, unless a “harder landing” or recession starts to build contagion across the globe, I believe these higher oil prices are here to stay. As I have been writing, OPEC+, including American producers, are just not going to let WTI crude prices drop below $70/barrel for extended periods of time. Since crude oil prices have risen hard in the past week, the cost of all products connected to crude oil have risen as well. We have not seen prices drop one day the entire week. I guess we’ll see if there is any cooling or profit taking on crude prices next week.

The Chicago market has rocketed higher and given back all of the low spot basis of the past few weeks. Diesel prices have gone up 70 cents/gallon and gasoline continues it’s slow grind higher. Unfortunately, diesel supplies are going to be tight when harvest starts. Two of the main refiners in our market are going down for maintenance. So if there is a rush on harvest, prices of diesel could rocket even higher on tight supplies. For now, the days of cheap diesel are behind us. In addition, if Saudi Arabia continues to limit diesel shipments to the East Coast, Chicago refiners will move barrels east.

Propane spot prices have actually gone up 10 cents in cost the past week and a half. Propane future pricing continues to be weak. Given so many unknowns in the marketplace, we highly recommend everyone topping their tanks off by the end of August and contracting for next year. Even though propane inventories are in great shape, logistics of moving propane around the country continue to be difficult and could cause issues resulting in higher prices.

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

Best regards,

Jon Crawford

Slow And Steady Wins The Race

Good morning!

Happy Friday! Not much has changed in the crude oil markets since last week. Crude oil prices continue their slow and steady climb higher. WTI looks to close above $75/barrel this week. I believe $80/barrel on WTI is a better bet than price falling back below $70/barrel. There is so much synergy between all crude oil harvesting companies around the globe. Demand for crude oil will only increase as inflation eases and banks get comfortable with de-risking. Most large banks are merging/purchasing smaller banks and the portfolio of potential losses from office space rentals seems to be much less of a concern than previously reported. In cities where office space is dwindling and risky, other cities are experiencing massive growth. So the office space crises supposedly will be localized to certain markets, not a national crisis

In local retail news, I wrote last week that the Chicago spot market was very long on diesel and could go up possibly 50 cents/gallon at any point in the coming weeks. Well, the night I wrote my last blog post, diesel cost rose 50 cents/gallon in our market. The cost of gasoline and diesel continued to rise this week. I expect to see retail prices of diesel and gasoline at the pump move higher next week.

Although propane fundamentals remain weak, crude oil prices are starting to offer support from the floor that landed a couple weeks ago. However, propane prices did still drop overall in the month of July and we might see just a small decrease in propane retail prices/contracts in August. However, the price change, if it happens, would be minimal and we still have a week left in July.

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

Best regards,

Jon Crawford

Crude Oil Prices On A Stair Climber

Good morning!

Happy Friday! Crude oil prices continue to climb higher even though recession fears in the US and China linger in the background. I believe that traders are buying into the idea that oil producers in OPEC+, including the US, are being very disciplined with their harvesting and capital expenses. Everyone would rather sell less oil and make more money than gain market share from a competitor. As all oil companies look to diversify their businesses, the action of “flooding the market” seems to be off the table. WTI crude oil prices broke through $75/barrel this week. As I have been writing, I do not see a scenario where WTI prices hold under $70/barrel. American producers will cut production to keep prices higher if WTI starts to drop dramatically. The war in Ukraine is continuing to put pressure on Russian crude oil sales, but as long as China and India continue to purchase Russian crude, we shouldn’t experience any major spike in price. We will probably continue to see WTI price ebb and flow between $70-80/barrel. In addition, Saudi Arabia announced further cuts on shipments to the US East Coast. The move will put pressure on the Gulf Coast and Chicago markets to move barrels east. The scenario will eventually cause a spike in refined products in Chicago and the Gulf Coast due to higher demand for diesel during harvest and supplying the East Coast. Although recession fears continue to dominate the news, I would not relax and bet on crude oil prices dropping through the floor.

In local news, refined diesel prices out of the Chicago market are hitting the lowest cost of the year. But the devil is in the details. Chicago diesel is trading over 30 cents/gal under the Group and East Coast markets. Chicago has the ability to move barrels to the East Coast markets. I believe there is a “head fake” going on. In other words, what’s going on in Chicago will probably be short lived and diesel prices will jump much higher at some point in the near future. The futures on diesel out of Chicago are much higher and off the lows of back in January. Gasoline prices continue to remain in a narrow range and I don’t expect to see pump prices on gasoline drop much in the near term. Diesel retail prices might drop, but most retailers will use caution because the cost could jump much higher on any given day.

Propane prices continue to climb higher. We are at the lowest retail price of the year, but if crude prices continue to climb higher propane prices will follow. We highly recommend all customers top off their tank right now and contract for the upcoming heating season. Remember that you have until the end of August to lock in your price.

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

Best regards,

Jon Crawford