It’s been hard to know what is real news or what is fake news over the past several years. Yesterday’s headlines were no different.
WTI tumbled nearly 15% yesterday as there some reports that the UAE was going to break with OPEC’s supply reduction quotas and provide more oil to the world…then in the afternoon, the UAE said that was not true. This, from the linked item: “The United Arab Emirates is committed to the OPEC+ agreement and its existing monthly production adjustment mechanism, its energy minister said on Wednesday, hours after the Arab country’s ambassador to Washington said it favors an output increase. “The UAE believes in the value OPEC+ brings to the oil market,” UAE energy minister Suhail al-Mazrouei said on Twitter.”
The distillate marketplace is concerning. This, from John Kemp of Reuters: “U.S. DISTILLATE fuel oil inventories fell by -5 million bbl to 114 million bbl last week- the lowest seasonal level for more than 15 years. Distillate stocks were already looking tight and are now on track to become exceptionally tight before mid-year. Distillate inventories are on course for an expected first-half low of 103 million barrels (with a range of 92-114 million). Stocks are on track to hit an even lower seasonal level than 2008, when distillate shortages helped propel crude oil prices to a record high at the middle of the year.”
Also from Kemp, an opinion column with the headline that reads, ‘Oil Market Caught in Biggest Shock since 1970’s’. This, from the linked item: ‘U.S. petroleum inventories are depleting to critically low levels as output fails to keep pace with the rapid rebound in consumption after the pandemic, putting intense upward pressure on oil prices. Inventories are now 99 million barrels (8%) below the pre-pandemic five-year seasonal average for 2015-2019 and at the lowest seasonally for seven years…Gasoline stocks are close to normal but stocks of crude are 51 million barrels (11%) and distillate stocks are 30 million barrels (21%) below the pre-pandemic five-year seasonal average. Distillate consumption is closely correlated with the business cycle because distillate fuel oil is used primarily as diesel in freight transportation, manufacturing, farming, mining and oil and gas extraction. Distillate is also a near-substitute for jet fuel so the inventory situation is affected by changes in aviation especially long-haul passenger and cargo flying…Stocks are on course to hit an expected low of just 103 million barrels before the middle of the year, with a possible range of 92-114 million barrels. That would put stocks below the previous low in the first half of 2008, when a shortage of distillate contributed to the spike in Brent crude prices to a record high of $147 per barrel.’
The entire article is worth your time.
With yesterday’s precipitous drop in oil values, propane values also dropped hard as well, moving down ten or more cents per gallon for both TET and Conway barrels. Since the beginning of March, Conway’s daily average has risen from a low of $1.4100 to over $1.6000, and yesterday, back below $1.5000. TET has experience the same type of moves. Time was when that sort of short term volatility would have been the cause of major headlines in our industry…but now, it feels like another day that ends in ‘y’. As we have been repeating for the past two years here at The Propane Buzz, volatility is about the only thing one can count on….and we are nowhere near the edge of the woods on that front.