Tag Archives: westfield

COVID and OPEC+

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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

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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!

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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

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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

FED vs Supply/Demand

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Good morning!

Happy Friday.  We received some much needed rain in our area last night which was a nice way to start to the weekend.  Crude prices continued their run higher this week as crude inventories continued to decline in the US with record demand.  Anticipation of continued world demand is also keeping a strong bullish sentiment on energy commodities.  However, the FED on Thursday dropped some hints that rate increases will be moved up as well as increases of their inflation forecasts.  The dollar rallied against the main basket of currencies yesterday causing a midday crash in crude prices of over $2/barrel.  However, the crude markets recovered by the end of day and are surging ahead to end the week.  The energy markets seem to be all-in on a bullish run believing that supply will be tight around the world by end of summer.  I am not fully convinced of the bullish attitudes considering there is still a staggering amount of world crude production sitting on the sidelines waiting.  Meanwhile, the US has recovered to 11M bpd crude production with 92% refining capacity, and crude inventories are still dropping.  What the scenario says to me is that possibly our crude exports are very healthy.  Eventually, our competition is going to want a piece of that pie.  I could see someone blinking over the next few months and causing a correction in crude prices.

Although crude prices have increased, gasoline and diesel prices eased a bit due to continued increasing refining utilization and building inventories.  I expect to see gasoline retail prices hold near $2.79/gal and diesel prices near $3.00/gal.

Propane cost has continued to rise and does not seem to be showing any signs of decreasing.  Future pricing also continues to hold even though we are going into summer season.  I would like to point out, that although propane prices seem high, when looking at the cost of propane in comparison to crude oil, the current pricing on propane has good value.  Until crude prices collapse, I just don’t see propane prices falling lower.  When coupling high crude prices with lagging inventory builds, unfortunately I think these current prices on propane will be here to stay for a while.

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

Best regards,

Jon Crawford

WTI Crude Over $70/Barrel and Propane Prices Climbing

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Good afternoon!

WTI price continued the climb this week and finally broke $70/barrel.  Demand coupled with a weaker dollar and overall exuberance are keeping prices inflated.  When I look at the data coming out of the inventory report this week, I am seeing a picture that feels very heavy on crude prices.  Supplies are great, refinery runs are increasing, and refined product levels are increasing.  Even though crude inventories diminished again this week, the details are showing that we are only refining more crude to store gasoline and diesel.  If China continues to shut down parts of the country and there are any other setbacks across the globe or a demand drop comes to the US, crude prices could tumble.  I have a feeling that OPEC+ will continue with their plan to keep crude production increasing, especially after the US said they will not be lifting sanctions on Iran until time has passed in a possible new nuclear deal.  Other data showed a 5% CPI increase in May and the spread is making it’s way into all areas of travel vacation.  Time will tell if eventually demand starts to take a breather in the US.

In local retail news, Bp Whiting finally put their refinery back online.  Although spot market cash differentials dropped a bit on the Chicago exchange, the continued increase in crude prices has offset much of any relief in retail prices at the pump.  However, current prices at the pump will at least hopefully take a breather from much more upside movement.

I have been ringing the alarm bell for months.  Propane prices continue to rise this summer.  Nine times out of ten, propane prices drop dramatically in the summer.  This is that one year.  Propane price is coupled much with crude prices.  So as crude prices remain high, so goes propane.   In addition, national inventories are still below average, although some good builds hit the market the last two weeks.  For now, propane has ignored cues on inventories and is following the price of crude.  I do not expect to see propane prices fall to normal summer lows.  I also recommend that everyone contract their anticipated propane needs for next heating season.  I hope to have our contract pricing out by the end of June or right after the 4th of July.

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

Best regards,

Jon Crawford

WTI Crude Price Almost to $70/Barrel

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Good afternoon,

Crude prices continued their push higher towards many bankers’ hopes of $70/barrel.  Throughout the week, continued news stories push the narrative of higher prices.  We closed the week with WTI at $69.62/barrel.  The last time we were holding these prices and climbing was in January of 2020 and the world economy was on fire.  Spike in world demand and potential tightening of crude supply are the main drivers of price right now.  However, in the US, crude inventories decreased, but refined product inventory increased.  So a lot of crude was refined into products and stored.  And Russia is threatening to leave “the dollar” as the closing currency for crude trades.  Ands OPEC+ is discussing further increased outputs in June.  In addition, the US is not adding rigs very quickly but a lot can change in the coming months.  I’m seeing a potential for crude prices to start falling at some point this summer.

In local news, gasoline retail prices are inching closer to $3/gal.  The national average retail price for gasoline is now over $3/gallon.  Diesel retail prices have broken through $3/gallon.  But diesel prices are a bit higher due to a refinery issue the largest refinery in the Midwest: Bp Whiting.  The issue has lasted a few weeks but looks to be fixed, so I expect the cost of diesel to ease a little in our market over the coming week.  But don’t expect the price to drop at the pump if crude prices stay high.

Propane inventories finally displayed a large inventory build.  Although most of the builds were on the Gulf Coast and the East Coast.  The Midwest supply is still under the five-year average.  We must continue to increase Midwest inventory.  If we don’t and we have a very cold winter, supply will be tight and much pressure will be put on the pipeline and railroad support.  Prices have finally taken a breather but could still go higher if inventories do not increase in the coming weeks.  Contracts for next season should be released at the end of June or early July.

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

Best regards,

Jon Crawford

Wishing A Safe And Enjoyable Memorial Day Weekend

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Good afternoon,

I would like to take a moment and wish everyone a safe and enjoyable Memorial Day weekend.  I know many of us will be traveling and enjoying activities for the first time in a very long time.  But please take a moment and reflect on all the service men and women who have given the ultimate sacrifice of their very own lives defending our country and our freedoms which allow us the opportunity to enjoy an extended weekend.

I will keep my update short and just say that prices are going up.  From crude oil to propane, prices continue to rise.  All eyes and ears will be on OPEC+’s meeting in June.  Until then, keep your wallet handy while purchasing gasoline, diesel, and propane.

Have a great weekend and I will touch base more next week.

Best regards,

Jon Crawford

WTI Crude Oil Falls Below $65/Barrel Support

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Good morning,

This week crude prices tumbled on the news of Iran and US approaching a new nuclear deal.  The deal would allow Iran to sell crude through transparent channels on the open market.  With the additional crude supply from Iran hitting the market, Saudi Arabia would have a hard time allowing Iran to take customer share.  Therefore, traders are thinking that crude has the potential to fall into surplus if demand does not ramp up quickly.  In addition, with inflation running hot, COVID-19 making a resurgence in East Asia, and supply chains a mess, portfolio managers are starting to move from risky assets into more stable investments.  Along with the small crude correction, crypto currencies experienced nearly a 30% correction this week as well as sell-off’s in tech investment.  As managers look to place their bets for the remainder of the year, some are saying the FED will announce a taper of their bond buying program in the second half of the year.  I think that WTI might trade in the range of $60-65/barrel until we get closer to the OPEC+ meeting in June.

Local retail prices have peaked for the time being given the slight correction in refined products this week.  I would expect to see some cheaper street prices on gas and diesel towards the end of next week possibly, but not much.

Propane prices are holding very firm.  Inventory continues to be very low in the country at a time when levels should be building.  Exports remain high and demand is still holding stronger than normal.  Production is also high, so if demand tapers at all we can start to rebuild quickly.  However, we are under the 5-year average at this time.  I do not expect to see summer-fill prices get much lower this year, if at all.  The only good news in propane is that Canadian inventory levels of propane are building at levels greater than last year.  So if the US falls short, with rail economics being attractive for the coming year, we should be able to supplement large amounts of propane from Canada.  But, this is also dependent on the reliability of the railroad transport system which has been very chaotic the past few years.  I am looking to release next season’s heating contract pricing the last week in June.  More info to follow.

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

Best regards,

Jon Crawford

The Gasoline Shortage That Wasn’t

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Good morning,

The big news this week was the hacking of the Colonial Pipeline in South Eastern USA.  The ransomware attack shut down the largest distribution pipeline causing massive panic buying fueled by constant media reports and disinformation.  I shook my head as gas stations all over the East Coast started to run out of fuel.  In addition, the misinformation caused panic buying in states that are not even supplied by Colonial.  Down in southern Florida, stations started to run out of fuel and even in Wisconsin, lines formed at the pump to panic buy based on fears of price spikes and supply problems.  The truth is that there was never any spike in cash price markets in the Gulf Coast or New York Harbor.  In fact, a gallon of base price gasoline continued to trade at a CHEAPER rate than the Chicago market!  Go figure…  So the media hype of the week made a potential supply problem into a disaster that could have been avoided with accurate reporting.  Colonial has reported that they were operating on “outdated Microsoft Windows” and decided to pay $5M in ransom for their information to be returned.  The information that was stolen contained which companies owned what products and the volumes there of throughout the entire pipeline.  Therefore, the information was very valuable.  Crude oil prices traded up this week on the news of the pipeline hack, along with Israel/Palestine conflict, and potential increased demand outweighing the disaster in India.  This week was a perfect example showing how the media can affect commodity prices and unfortunately business/consumers outside of the Colonial issue paid the price.

In local news, cost of product continues to slowly tick higher.  Retail prices of both gasoline and diesel are holding near $3/gallon and I don’t expect to see much relief until possibly after Memorial Day.

Propane prices also continue to be stubbornly higher than normal.  Although our country experienced a nice rebuilding in national inventory this week, prices continue to hold firm with crude’s movement and high rates of exports.  I’m not quite sure we are going to see much lower prices until possibly later into end of summer or early fall based on inventory levels and potential corn drying demand.

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

Best regards,

Jon Crawford