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.
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