It appears the bulls are in control of the market. The uptrend began July 19th and has been up every day since on crude and distillate, gas had one minor down day, other than that it is all on the upside. This morning the market was fairly quiet, and thoughts were that maybe traders would take a day off. But as of this writing distillate is up $.02 cents and gas is up a penny.
For most of the year fears of crude demand destruction dominated prices and were holding mostly to a bear market trend. More recently worries about tighter supplies later this year have been driving the market and resulting in higher prices. Supply vs demand are most often the drivers of market movement. OPEC+ continues with production cuts through August, the group will meet next week to discuss their next move, but as of late there are more real time events causing the momentum.
If you have been outside lately you may have noticed, it’s HOT. Here in the Midwest, we have been experiencing hotter temps for consecutive days, temperatures in the southern U.S. have been worse. And of course, in that region are many refineries. The threat of refinery outages remains fragile, with reports out today of equipment failures due to the significant heat wave, any sporadic outages will provide support to both gas and diesel pricing. Also remember that hurricane season is not far off, any disruptions can again cause swings to occur and potentially drive pricing higher.
Perhaps you want to layer in some of your fall refined fuel needs, if you are interested in forward contract pricing, please contact your Energy Account Manager.
PROPANE
Propane is also seeing gains. The EIA reported a build of 1.03 million bbls on U.S. propane inventories for the week, lighter than the expected build of 2.2 mil bbls, and a surprising draw in the Midwest. This is the 2nd consecutive week showing smaller builds. International prices are also up this week, yet our prices our still lower, which makes our supply vulnerable to being sold to the Far East and Europe. As of 7/21/23 the U.S. is exporting 64% of production.
While here at home we do have a good supply currently in comparison to the 5 yr. average (see chart below), LP pricing can detach itself from fundamentals and follow the rising crude market, which is definitely happening this week. We are contracting for the forward heating/drying season, if you are interested in getting quotes, please reach out to your Energy Account Manager.
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