Wait And See

Good morning!

I hope this message finds you well.  Crude prices held just under $70/barrel this week as the world waits to see how Covid-19 and the variants play out going into the fall.  Saudi Arabia announced deep discounts for October signaling weak demand, but then Europe and the US released info showing signs of stabilization in the Delta surge.  In addition, the Fed is signaling a slowing of bond repurchases and many other world banks are slowing bond repurchases.  South Korea even raised interest rates.  In America, 80% of Gulf oil production is still shuddered from Hurricane Ida but slowly coming back online.  But the weekly inventory report still showed strong exports.  And although the job market is looking primed to finally improve, consumer index pricing increased the largest ever at 8.5%!  Basically, a lot of bullish and bearish news for crude price direction.  I think with summer demand winding down but possible economic conditions improving in the US, many traders are going to wait and see.  Also, harvest is starting to kick in so many eyes will be watching crops in the coming weeks.

In local retail news, prices for gasoline and diesel have eased a little bit post Labor Day weekend as expected.  I believe most retail prices will be holding for a bit as well.

Propane prices continue to go up as national inventories are just not building.  The country is going to be short on propane and prices are going to remain high.  If corn drying demand is weak and temperatures stay warm, we could maybe see some price relief.  However, if we have any sort of cold snaps and demand bumps, propane prices could really blow out higher this season, well above $2/gallon.  If you have not done so, you can still contract and lock-in your heating price for the season.

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!

Good afternoon!

Instead of a dismal update on prices continuing to go up, let’s just take a break and enjoy the last weekend of summer!  I hope everyone has a safe and fun Labor Day weekend!  We can get back to the world of commodity pricing and the state of affairs next week.  🙂

Thank you again for your business, and if you have any questions, comments, or concerns, please feel free to reach out!

Best regards,

Jon Crawford – Pres

And Just Like That…. WTI Back Near $70

Good morning,

What a difference a week makes.  Crude prices rebounded very strongly this week.  The dollar started losing strength as investors looked to the FED to unwind the easing programs.  Crude inventories showed a larger than anticipated draw on Wednesday.  China announced a reopening of their economy with a call for increased crude imports.  The exit from Afghanistan is causing unrest in the Middle East.  And the delta variant looks to be peaking for the majority of the United States.  All of these issues combined gave an enormous tailwind to the crude trade and pushed prices much higher.  In technical trading, WTI displayed what we call a “Golden Cross”.  A golden cross occurs when an asset’s shorter-term moving average crosses above its longer-term moving average.  A golden cross has only happened twice in the past twenty years, and both times prices rebounded 20-50%.  Therefore, there is a lot of chatter that crude prices could breakout for the end of year.

In local retail news, Chicago refineries are showing problems with upcoming fall maintenance season.  Differentials for gasoline and diesel prices jumped nearly 20 cents per gallon!  Therefore, I do not see much price relief at the retail level through Labor Day weekend.

Propane prices continue to hold firm.  As I have been writing for months, this year is the outlier in the past ten years.  Every ten years, there is always one year where price goes up in the summer.  Unfortunately, the US continues to export record levels of propane to China.  China is expanding their petrochemical businesses as their economy reopens.  Although I believe corn drying will be less than expected, national inventories will be tight going into winter.  I am not concerned about running out of propane, but logistics in moving propane to the correct areas of the county will be choppy.  I expect a bumpy ride with prices this winter if we experience any “polar vortex” or any prolonged colder than average temperatures.  We are still locking in heating contracts for the season and doing summer fills before the cooler temps begin.

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

Best regards,

Jon Crawford

Relief For Crude Prices… Not Much For Propane

Good afternoon,

I hope this message finds you well.  Crude prices dropped dramatically this week as the delta variant continued to spook investors on world demand for crude.  Also, many large retailers started to show a slowing down of their burning hot sales over the past year.  And then the FED announcement looks to position towards a tapering of bond purchases signaling a rate increase maybe next year.  As demand threats pulled down crude prices, the FED announcement gave strength to the dollar which pulled crude prices down even further.  Now that WTI crude prices are below $65/barrel, the possibility of sub-$60/barrel is on the table.  WTI is approaching a price range that is more in the normal pre-pandemic years of healthy crude oil supply and demand economics.  However, with the unrest in Afghanistan and lock-downs in China, anything can happen.

Retail prices of gasoline and diesel will probably start to ease next week with the drop in crude prices.  Considering the tight margin markets and summer demand starting to diminish as school starts, I don’t expect to see dramatic drops in prices at the pump.

Propane price continues to hold very firm, even in a downward market momentum for crude oil.  Propane inventories are now officially at eight year lows and exports are kicking back up again!  I believe the only way out of the propane supply mess at this point is higher prices.  The arb between US and Middle East exports has to increase.  There has been small dips here and there but overall, the price of propane continues to hold and track towards higher as we go.  If you have not contracted your propane for the season, there is still time to call and lock it in.

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

Best regards,

Jon Crawford

Customer Appreciation Day!!!

Good afternoon!

I wanted to make sure everyone was aware of our Customer Appreciation Day lunch tomorrow at Fort Bp location at 1901 Hwy 33 in Portage, WI.  We will be serving a free lunch between 11am-1pm tomorrow, including raffles and specials on items in store.  We will also have free koozies for everyone who attends!

WTI oil prices fell below $70/barrel this week as crude supplies in the US experienced a significant build in inventory.  In addition, the Delta variant is spooking the markets with fears of economic slowdown and schools not reopening.  Also, the private sector jobs report was half of expectations.  OPEC+ is worried about continued battles over production quotas as many nations have invested heavily in updated crude production facilities and want to be more in the market.  The last squabble in July might be signs of more to come.

In local news, the retail price for gasoline went above $3/gallon briefly in our market.  Gasoline and diesel retail prices are holding around $3/gallon and I don’t expect to see many changes in the coming weeks.

Propane prices are continuing to hold firm.  Contracts for the upcoming heating season are available.  And don’t forget to top off your tank at a slightly lower price this summer.

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

Best regards,

Jon Crawford

Wild Roller Coaster Ride!

Good morning!

Crude prices are ending the week higher than where they started.  The week was the most volatile we have experienced in over six months.  Monday started with over a $5/barrel correction in crude price due to OPEC announcing an end to production cuts starting April 2022.  Many companies took profits on the news, rang the register, and waited to see happened next.  Crude prices are up almost 60% for the year, so it’s not a bad return on some positions for traders.  However, the market called a bluff and basically clawed back all the losses by the end of week.  Even though COVID is causing issues in many parts of the world and the US inventory report was very bearish, crude prices continued to climb.  Although the price did not fully recover from Monday’s bloodbath, WTI crude still settled back above $70/barrel.  I’m not sure we will see $100/barrel crude oil, but for now, crude prices seem supported at current levels.

Gasoline and diesel retail prices will probably remain pretty steady at the current rate.  Although cost dropped dramatically on Monday, the cost increased back to the starting point by the end of the week.  So unfortunately, there looks to be no change in site for prices at the pump.

Propane price is continuing to remain very bullish and well supported.  Inventories are over 25% lower than last year and we are now at the lowest inventory level in nine years.  Even though crude prices eased a bit, propane price did not give up much ground and quickly recovered.  I do not see much relief for propane prices on the horizon.  We will have to wait until after harvest before we really get a better feel on the winter supply situation.  However, Canada continues to have ample inventories so our rail terminals will be able to hopefully provide a much anticipated supply relief this winter.  Our contracts for the upcoming season are out.  Please feel free to call the office to sign up today!

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

Best regards,

Jon Crawford

COVID and OPEC+

Good morning,

Happy Friday.  I hope this message finds you well.  OPEC+ and UAE finally reached a supply agreement to allow UAE to increase their base crude level supply numbers starting in April of 2022.  So at this point, OPEC+ looks united to continue increase output from now through 2022.  Crude prices softened a bit on the news but were kept supported by another larger than expected draw in US crude oil inventories.  As jet fuel demand and gasoline demand continue to skyrocket, diesel demand is lagging.  Although demand for crude in the US seems to be strong, around the world the delta variant from COVID is slowing down many countries from full economic recovery.  Even in the US, the delta variant is adding a new variable as cases are up in every state.  The markets are a bit spooked of an economic slowdown going into the Fall, so crude prices look to close this week lower than last week.  For now, all eyes will be on the delta variant in the US to see if we peak in August before school starts.

In local news, gasoline and diesel retail prices have taken a breather.  With crude prices easing a little, I expect current pricing on the street to hold for a little while.

Propane prices continues to hold tight as inventory levels are lackluster for this time of year.  Currently our supply in the US is at the lowest level in over eight years.  Until corn drying and next winter weather predictions start to roll in, I don’t see propane prices going down anytime soon.  Our contract prices for next year have been released.  Please call our office for contract pricing and current summer fill rates.  We also highly recommend everyone getting a summer fill at this time.

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 Pogo Stick

Good morning!

Crude prices took a ride on a pogo stick and are looking to end the week just slightly lower than where they started.  The week started with a failed deal at OPEC+ on agreement over increased production runs. UAE decided that the deal does not work for them since the baseline quotas look back to 2018 and do not take into account the investments made over the past couple of years.  The markets reacted very strongly signaling WTI crude prices could roar past $80/barrel.  However, by the end of the day, the markets realized that maybe a non-agreement would cause all members to cheat and open the export valves.  I have been writing that eventually someone in OPEC+ is going to cheat and start exporting more than what they agreed upon.  As the week closes, a deal has still not been met.  During the week, crude prices fell on the news that the delta variant is starting to shut down places across the globe that have low vaccination rates.  Tokyo declared a state of emergency and banned spectators from the Olympics.  Sydney is imposing new measures, and South America is still out of control with COVID spread.  In addition, back at home the delta variant is starting to rapidly spread in states that have low vaccination rates.  The world news on OPEC+ and COVID, started a sell-off, but was quickly brought to a floor on a whopping 8M barrel draw in crude inventory here in the US!  Couple the inventory draw with good economic data and a weaker dollar, and crude prices bounced back to just under where they started the week.  The volatility experienced this week will continue throughout summer and possibly until the end of the year due to COVID and OPEC+.  So I hope you like pogo sticks because we are going to be riding on one for quite some time.

In local news, gasoline retail prices have peaked for the moment under $3/gallon in our market and diesel retail prices have held near $3/gallon.  As long as crude continues to bounce in the current range, we should continue to see retail prices hold near current levels.

Propane prices continue to go up, up, up.  We are on pace for the lowest inventory building season in almost ten years!  We prefer to have 100M barrels of propane in US inventory by the end of September and right now, at the current pace, we are looking more like 78M!  Going into winter with potentially 20% below need is keep propane prices high.  So unfortunately, until we see our inventory builds gain pace closer to hitting 100M by end of September, I just don’t see much relief in propane prices.  Even with a massive drop in crude oil prices, I don’t that scenario equating to a reciprocal drop in propane price.  We have our contract prices out for this coming season.  Please feel free to call our office for more information.

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

Best regards,

Jon Crawford

Happy 4th of July!

Good morning!

I wanted to take a break from the updates of higher prices and all the chaos around commodities and wish everyone a safe and happy 4th of July celebration!  We have plenty of time after the long weekend to go back to worrying about prices of gasoline and propane.  🙂  So let’s take a few days and enjoy some fun and laughter with friends and family.  I will catch everyone up on OPEC+  and propane outlook next week.  Thank you again for your business and have a great extended weekend!

Best regards,

Jon Crawford

Same Old, Same Old

Good morning,

WTI Crude oil continued to trade in a narrow range between $70-75/barrel.  As the OPEC+ meeting approaches, the debate between Saudi Arabia and Russia is starting to heat up.  Saudi wants to keep production increases small to support prices, and Russia wants all limits lifted to put pressure on US producers and go after market share.  In more geopolitical news, Iran elected a new hardline-president that looks to further isolate Iran from a nuclear deal with the US.  The potential for a negotiation stand-off is back on the table which would keep Iranian crude exports from increasing with greater transparency.  At home, inflation continues to rise and crude inventories continue to fall giving support to prices.  Even though US production is strong, exports and domestic demand are strong.  So for now, we wait and see what happens with OPEC+ meetings.

In local markets, retails prices continue to rise with the cost of product.  Gasoline retail is inching ever closer to $3/gal and diesel retail has been holding fairly steady around $3/gal.  Unfortunately, until we experience any major drop in crude prices, these retail prices will be here for a bit.

Propane cost continues to go higher and higher.  The US is now officially at the lowest level of summer propane inventory in over eight years!  There is quite a possibility that the retail prices back in April will be the lowest for the year.  I highly recommend everyone locking in some of their heating season gallons.  Although Canada is flush with propane, rail shipments will be very volatile as backorders of goods and cars start to return to the market possibly end of year.  Unless crude oil prices fall over $15/barrel, I can see propane prices being in for a wild ride this year.

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

Best regards,

Jon Crawford