Good morning!

Crude prices continued to move higher this week with a small relief starting on Friday.  High hopes of economic recovery are fanning the flames of anticipated record demand.  Many investment banks and so-called “industry experts” are saying we will experience the largest demand increase in history over the coming months. Goldman Sachs continues to push their crude call-price higher and higher saying a 5M bpd increase is going to cause shortages and supply tensions.  In fact, the amount of “pumping up price” talk going on feels like when crypto annalists get on the airwaves to move the price of Bitcoin.  I like to take a step back and look at the big picture.  Yes, demand increases are coming.  We might even experience a 5M bpd increase.  However, there is almost 15M bpd crude production offline voluntarily between OPEC+ and the US!  In addition, Libya just released their hold on crude exports.  The US is looking to allow Iran to increase exports with transparency in exchange for a new nuclear resolution.  Russia and the US are starting to bicker and Russia is not afraid to play politics with their oil supply.  And at these high prices, OPEC countries could finally start to take advantage and make some money.  In addition to the crude markets being well positioned to increase production, refineries in the US still have an additional 10% of increased capacity to meet local demand!  And most refiners locked in crude prices at lower prices so there is nothing holding them back from refining crude!  In other words, the crude market is feeling very frothy with “pumping up price” stories.  I think we could see some higher prices until greed takes over and surplus production starts to enter the market.  But after 2020, who knows!  As always, this is just my theoretical analysis.  In the world of commodities, anything can happen.  🙂

In local retail news, gasoline and diesel prices continue to climb.  Diesel retail prices are getting very close to $3/gal.  In fact, I saw a few smaller markets with diesel prices over $3/gal.  Gasoline retail is holding near $2.74/gal in most markets.  I was quite surprised by the run up in price this week.  If the markets were truly being “pumped up” to cover a squeeze on future options, we could see some relief on pricing in May or June.

Propane prices have started to rise again in tandem with crude oil.  Propane supplies are tight as we start the rebuilding season, but not as bad as years past.  In addition, April has been much colder and May is not looking to start out much better.  The wild card compared to years past is high levels of exportation which we are watching closely.  I do not think that summer fill prices will get much lower than today’s prices.  With so much uncertainty in the propane market, I also do not expect to see next season’s contracts released until mid July.  For now, it’s all about being patient and waiting for the right opportunity.

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

Best regards,

Jon Crawford

Good afternoon,

Well, the energy markets were fairly calm this week.  Not a lot of movement on crude prices or refined products.  Even though the US, China, and Europe are showing signs of strong recovery coupled with a somewhat tighter supplies, the massive outbreak in India is putting a tight cap on any upside movement.  And as the recoveries begin in some major parts of the world, the reality of the total crude barrels today being voluntarily removed from the market is starting to become a factor.  Although demand is returning with tighter supplies, over 10M barrels/day of crude production is being voluntarily withheld from the market.  As the appetite for crude increases, I have never seen producers remain disciplined for very long.  I am not seeing anything that would cause a massive selloff into the $40’s again, but I do think the talk of extended WTI pricing above $70/barrel is a bit wishful.

In local retail news, gasoline prices have remained higher near the $2.75/gal price point.  Diesel retail prices have remained under $3/gal except for a few larger truck stop chains.  I am hoping that we top out around these prices, otherwise the massive amount of savings from stimulus packages will end up in fuel tanks.

Propane is continuing it’s cautious moves into summer.  We are officially at the third lowest level of inventories over the past 10 years.  The major difference between now and then is exports.  Our export capacity is nearly double compared to other years of low inventories.  I am a bit cautious on whether or not propane supplies will be able build to a point of calm going into winter.  Because of the current supply conditions, allocations and multiple supply points will be vital for success.  I do not expect to see propane prices go much lower.  I am also not seeing much movement on futures pricing.  Unfortunately, I think propane prices for next winter will be near the prices of today.  Hopefully we can maintain prices under $1.50/gal which is usually a good bench mark for good value in comparison to other forms of energy.  More to come on this as we go through May and June.  Stay tuned!

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

Best regards,

Jon Crawford

Good morning,

The markets were fairly quiet and calm this week except for Wednesday.  On Wednesday, the EIA released their weekly inventory report and the drawdown on crude oil inventories was almost 6M barrels.  The report supported the statements from many shale oil producers saying there were going to hold off on pumping crude back into the market too quickly.  In addition, demand for gasoline and diesel fuel outside of jet fuel is starting to return.  Crude prices spiked over $2/gallon this week.  But, OPEC+ is slowly unwinding their cuts and I do think that eventually someone will blink.  China and India are increasing imports at a dramatic rate and all producers want a slice of that pie.  In addition, Iran and the US continue to try and negotiate a new nuclear deal that will allow Iran to export more oil with transparency.  So although we are experiencing this slight uptick in crude price, I don’t see the trend continuing too much higher.

In retail news, gasoline cost continues to go up, and retail prices continue to go down.  Therefore, I expect to see retail gasoline prices jump fast past $2.69/gallon at any moment.  Diesel retail prices have eased a bit, even though cost has increased.  But I don’t see diesel retail prices going over $3/gal anytime soon.

Propane prices continue their slow and cautious moves lower.  The cold snap in April will provide a bit of support for prices, but national inventories are slowly starting to rebuild.  We have a long ways to go to move our national inventory above the five-year average.  Therefore, I still see prices being higher than usual for summer.  I still believe that customers should consider taking delivery of any contract gallons left on account by end of April.

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

Best regards,

Jon Crawford

Good morning,

Crude prices traded in a very narrow range this week.  Supplies are ample and demand is healthy in the largest economies, but the virus variants and targeted lockdowns in various countries are keeping any major price runup in check.  On the downside, a potential deal with the US and Iran is back on the table which would throw the crude markets into supply surplus.  The beginning of talks is putting downward pressure on crude prices, but not too much pressure as the negotiations with Iran are usually quite volatile and unpredictable.  For now, WTI crude price seems to be in a holding pattern around $59/barrel.  Jobless claims were a bit higher than expected and small business closures are climbing which is keeping American demand in check.  However, vaccinations are flowing at a record pace and a fourth wave seems like it will be targeted areas as opposed to widespread.  The crude market continues to be in a push-pull relationship with many economic issues, but the range of the swing has become much more narrow.

In local retail news, gasoline prices have eased a little from recent highs, but not much.  I don’t see gasoline retail prices falling below $2.49/gallon anytime soon based on current market conditions.  Diesel cost has also balanced out which will keep retail prices from breaching $3/gallon which is good for farming, construction, and shipping this spring.

Propane prices continue to slowly unwind but not as fast as some would like.  I am not expecting very cheap summer fill prices below $1.  I also know that next season’s heating contracts will be priced higher than this year.  I highly recommend that customers take delivery of any remaining contract gallons on their account.  If propane prices start to drop dramatically, I don’t see that possibly happening until at least August.  Stay tuned for more info as we wind down the heating season and approach allocation building season.

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

Best regards,

Jon Crawford

Good morning,

I hope everyone has a safe and enjoyable Easter weekend.  Nice to see the Brewers start out their season with a come-from-behind win yesterday!  Markets are closed today due to Good Friday.  WTI Crude prices closed for the week above $60/barrel.  Many were surprised, including myself, because yesterday OPEC+ decided to start easing production cuts which usually causes a bit of softening.  But the anticipation of the strong jobs report and the drop in the value of the dollar supported much higher crude prices.  I have a feeling that inflation fears coupled with anticipated stronger demand will hold crude prices steady into summer.  I think we won’t get to a point of seeing potential oversupply in the market until after Fourth of July.  There is a chance that we could experience the backwardation of cheaper prices on the back half of summer.  But I think that would also mean that the fourth wave of COVID-19 in Europe would need to greatly accelerate, which would be bad in general.  For now, keep your wallet out.  Prices at the pump are going to hold.

Gasoline retail prices continue to climb going into spring.  I do not expect to see much relief on gasoline prices in the near term.  Diesel retail prices have eased a bit but stabilized.  I feel that diesel retail prices will hold under $3/gallon for the next couple of weeks.

Propane prices are starting to stabilize.  Retail prices have unwound a little bit, but I do not see any downward pressure on propane prices until national inventory levels start to build.  We are very low on national inventory.  Production is strong so rebuilding can begin in April.  But the rate of rebuild will be watched very closely.  We are not out of the woods yet.  So for now, if you have last season’s contract gallons remaining on your account that expire in April, I recommend that you take delivery of those gallons if you have the storage capacity.

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

Best regards,

Jon Crawford