The United States still has a lot of crude oil and is still producing good amounts, but last night’s API report showed smaller than expected crude builds…and with some tension in Yemen, things are getting interesting. This article talks more about it, and here are a few highlights from the item:
Crude futures rose in post-settlement trading after the American Petroleum Institute (API) reported crude stocks fell only 2.6 million barrels last week, less than analyst expected. U.S. gasoline and diesel futures also rose on the API data, showing that gasoline and distillate inventories fell.
Also supporting oil were tensions in the Middle East, where fighting continued in Syria, Iraq and Yemen. Analysts fear Yemen’s civil war could destabilize neighboring Saudi Arabia. Iran said it will submit a peace plan for resolving the crisis in Yemen to the United Nations on Wednesday.
Iranian Oil Minister Bijan Zanganeh was quoted on Tuesday as saying OPEC should cut oil production by at least 5 percent, or about 1.5 million bpd.
Saudi Arabian oil minister Ali al-Naimi discussed oil markets on Tuesday with Russia’s ambassador to Riyadh Oleg Ozerov. Saudi Arabia’s March production at 10.3 million bpd was considered bullish and incremental internal demand could “substantially reduce global spare capacity,” energy information provider PIRA Energy Group said in its weekly report on Tuesday.
One of my biggest ‘dilemmas’ is when I write and/or say that I feel there is more downside to a market, but I am never not going to be straight with you. We still have a great deal of crude oil and crude oil production, but if we see consecutive reports showing crude builds at lower levels, along with Middle East unrest, those fundamentals will take a back seat to the more sizzling headlines. As for propane, if we do see exports tick up this summer, and to a significant degree, the downside might wind up being getting back to levels where we are now.
I have said all along that I think owning propane for this coming winter at current levels is not something that could hurt you. I still believe that. I also think owning propane for 4Q16 would be a wise idea at these levels.
You have to look at the data that is presented to you and make the best decisions for your market and to protect it. Many of you can still lock in prices for the entire winter at or under $.8000 at your favorite terminals. It’s hard to imagine how that isn’t going to be a profitable number for you when the cold weather comes back into favor.
If you’d like some fresh numbers related to locking in prices for any time during the next 18 months, give me a call at 918-477-0533. If I am not your account rep and you have made your way here, give them a call.
Here are a few more links worth a few minutes of your time:
DID YOU KNOW: There is a link at the top of my blog titled ‘The Buzz’. That has some news feeds related to energy and news that you might find useful each morning.