Crude oil prices have pushed back through $52/bbl, defying industry group think and my gut feeling that crude prices would stay in the $40’s, at the least, for some time.
Crude fundamentals still point to bearishness. Inventories are at all time highs and US production is in the process of cutting back as more and more rigs shut in.
That said, we are entering strong demand season for gasoline and refiners are going to be going at it like gangbusters. This article talks about how crude may have already reached an inflection point, and lists several factors to consider that will have an affect on crude’s direction.
For this week, Wednesday’s EIA inventory report will be an interesting number to watch. If the build is lower than expected, crude is going to run some more and propane prices will go with it. If it’s on par, I don’t think a drop will be dramatic. There has also been a lot of concern that crude oil storage will max out. I don’t think that is going to happen, which would hold off one potential bear.
Then on the flip side, here are two articles that are more bearish:
I think owning propane for the fall and winter at present pricing levels will not hurt your business. I would not load the boat just yet, but I am less confident of crude oil having a high $30’s bottom than I was a week ago…a week ago I probably would have wagered 80% of my chips…right now, I’d still push 60% in on crude returning to the mid $40’s.
Tomorrow’s EIA report will be one worth watching.