I will be right up front and admit I am not a world-renowned international economic expert. I know a little about enough things to be dangerous, but I do pay close attention to international affairs that I believe could impact what I do for a living.
Here is how I view what I do for a living; my goal is to be right more than I am wrong and help you add as much profit to your bottom line as possible. That takes a lot of studying. ‘Extra Time’ after school, so to speak.
The last two things I did last night before closing my eyes and saying my prayers were to read two financial opinions related to China and their ongoing financial collapse.
Yes, I am a blast at parties.
China is a big deal to me as I analyze what to expect in energy and pricing. They are the largest oil importer in the world, so what happens to their economy will have an impact (in some way and some time) on the price of propane you will purchase.
There isn’t any direct talk about China and crude oil in this one, but I found it to be fascinating and some good background to lay down as we analyze things to come.
This next article is titled ‘Analyst: Blame China Stock Slide for Oil’s Plunge.‘
From the item:
A perfect storm of macroeconomic factors has dragged oil prices lower, but China’s stock market slide kicked off this week’s 10 percent plunge in crude futures, said Tamar Essner, energy analyst at Nasdaq OMX.
Traders had largely digested progress toward a deal on Iran’s nuclear program and Greece’s debt standoff, but a nearly 30 percent correction in Chinese stocks caught them unaware, she said Tuesday.
“I don’t think the market really anticipated that things were quite as bad as they were in China,” she told CNBC’s ‘Squawk on the Street.’ “That had been a big tool in the arsenal of the oil bulls out there, who had said oil demand had been understated and could really surprise to the upside driven by China. That’s now thrown into question.”
Oil supplies in the United States and OPEC remain strong and should remain robust for the next two years, she said. At the same time, the hallmarks of the last 15 to 20 years that have supported oil prices—a weak dollar and low interest rates—are on the cusp of reversing.
The dollar has had a ‘good year’ as it relates to strengths against other currencies and it does not show any signs of going the other direction, what with the Euro’s uncertainty and the strength of the European Union being called into question over the Greece debt debacle. The American FED continues to talk about raising interest rates, but that can continues to get kicked down the street amidst conflicting beliefs in the strength of the American Economic Recovery.
On the Iran front, we could see sanctions lifted on that nation as early as Friday. When that happens, expect Iran to ramp up to pump out as much crude as they can. From the second article:
“Morgan Stanley analysts said up to 700,000 bpd in new Iranian exports were likely to arrive by early next year, delaying the recovery in oil prices and U.S. output by six to 12 months.”
-The dollar is on firm footing and getting stronger
-China’s financial economy is in free fall
-Iran may soon be back in the oil production game
-Worldwide crude oil production is at historically high levels
-Propane inventories are at historically high levels with no end in sight to the rise
-We’re at the midpoint of peak gasoline demand ‘season’ in the US
That’s Bear-a-palooza right there. Key market fundamentals that have big impacts on our pricing point towards the downside.
All this said, I continue to believe you are going to get a chance to buy propane for the winter at prices below current values. When it does become time to buy that gas, just remember the guy who told you to wait and who added those dollars to your bottom line 😉