I am in Indianapolis for the MPACT event, meeting with some folks so my updates may be spotty this week.
I have been surprised by the strength of crude oil this week. but when you factor in the FED’s likely interest rate hike coming in a few months and the effect that has had on the dollar, I think you can see that has been pushing up the price of crude oil.
Weaker dollar = stronger crude, more often than not. The dollar has had a great nine months as crude has tanked during the same time frame. The dollar has had a backslide as of late, and crude is up $6.00 off it’s lows of last week.
In the end, I still see weakness in crude which should lead to weaker propane prices this summer, and softer in the outmonths, though I am not as sold as a cratering of the outmonths given the scarcity of propane storage this spring and summer and look for the Contango to widen out.
Propane stocks built 700K/bbls last week, which is not a surprise given the warmer temps and waning winter season. Crude stocks built over 8M/bbls, which is huge.
I did find an interesting article this morning, discussing crude storage…most folks are worried we could run out of storage, but this item is less confident of that:
“oil producers could continue to add a million barrels a week (which is about the average over the past year) for nearly four years before crude oil storage is actually full”
It’s a quick and easy read…I wouldn’t say it’s ‘bullish’ but it is a different opinion than some you have been reading.