Leading off with a market commentary from Darius Lechtenberger from Flashpoint Energy Partners:

WTI crude oil and refined product prices are skyrocketing again this morning, which is a bit perplexing as yesterday the Fed raised the target for the fed funds rate by a quarter point…it is the first raise since 2018 with expectations for additional raises in each of the 6 remaining meetings this year. Typically this fiscal action would be a headwind for all commodities, but that is not the case this time. The reason this interest rate hike appears to have had a reverse effect on the market is due to a report published yesterday by the International Energy Agency (IEA). Basically, this report detailed that despite the willingness of China and India to buy Russian crude oil that as much as 3 million bpd of Russian crude and crude products may not be moving to market next month due to sanctions. Analysts are now calling for $120+ oil by the end of 3q22. Another item of interest was the Biden Administration removing restrictions on where U.S. LNGs can be exported…this is paving the way for propane to be shipped to places in Europe that have not been options.”

That is a lot to unpack….the markets were expecting a larger than 25bps rate hike…but the Fed has seemingly turned a bit more dovish to do skyrocketing energy prices…so in essence, this first move was not as significant as what has been expected since the FOMC met in February and signaled what they might do. But the elasticity in supply and demand that Darius noted likely plays a bigger factor here…there is still so much uncertainty in the world right now over crude oil supplies, that we are likely to continue moving back and forth quite sharply relative to price, for the foreseeable future. That last bit that Darius shared is most definitely a concern for propane prices, as we are entering the next supply building season from the lowest level we have seen in at least eight years…and in an environment where energy producers have been told for years that their services are not en vogue and will be phased out…therefore they chose not to commit a lot of CAPEX to production (can’t blame them, in my opinion) and now you have politicians screaming at them to bring production back up and threatening to tax the heck out of them for their greed…those things sell with constituents I guess, but in the real world, we have one heck of a boomerang effect going on. And if more US propane leaves our shores for export….it only bolsters already bullish propane fundamentals and *could* make it hard for propane futures value to fall.