Good morning!
Happy Friday! The past week did not have as much news as the week prior. The big news of the week was Israel rejecting a ceasefire deal from the negotiating group in Qatar. Israel is adamant that the remaining members of Hamas must be eliminated from Rafah. Estimates believe that there are three battalions of Hamas left hiding in Rafah. Each battalion is around 1,000 members. Pres Biden responded to Israel’s rejection of a ceasefire by withholding further weapons to Israel until Israel can release a battle plan that limits civilian casualties. Israel cut off the main supply route to Rafah. However, the humanitarian bridge that was built in the Mediterranean Sea is now functional. Therefore, aid should start to flow into Rafah to help the 1M residents sheltering in place. The accord that Pres Biden pitched to Saudi Arabia is DOA if Israel invades Rafah. Israel resounded to the United States weapon withholding by saying they will “go it alone” into Rafah. Since Israel’s announcement, Israel started targeted bombings in Rafah and asked all southern residents to evacuate. The conflict in Ukraine/Russia escalated a bit as Ukraine started to receive more weaponry support. Russia is reporting oil production issues, but is having no problem finding customers. China and India continue to buy all of Russia’s exports. In economic news, world crude oil production continues to barely meet demand. OPEC+ and United States producers are being very disciplined with their production. They do not want the world supply of oil to go into surplus. In addition, EIA reported a draw in crude oil inventories on Wednesday. The FED also signaled that maybe rate cuts could come sooner than end of the year. Crude oil prices did not pop as expected with all the action in Israel/Gaza. Instead, crude oil prices slowly crept higher from their lowest price in almost a year. WTI Crude Oil price is BARELY holding below $80/barrel. I expect any escalation in the Middle East region or Ukraine/Russia will push WTI price back above $80/barrel.
In local news, the Chicago Spot market continues to be tight on gasoline supplies. Gasoline prices have dropped a little bit, but not as much as diesel prices. Diesel production remains high and surplus-supply is starting to develop. However, demand for diesel is picking up as farmers hit the fields and construction projects fire up around the Midwest. I expect to see little movement in spot prices of gasoline and diesel. The spot market will probably start to move in tandem with the price of crude oil. Diesel spot prices are holding incredible value. I highly recommend purchasing spot diesel at these current prices.
Propane spot prices dropped to their lowest price in over six months this week. But a floor of support seems to be developing. Just like spot price diesel, spot propane price is holding incredible value right now. I suggest considering purchasing spot propane at these current rates. Next season’s heating contracts should be out next week or the following. Stay tuned for more info.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Best regards,
Jon Crawford