We have seen the price of Crude Oil retreat throughout July and into early August. It seems that North America is well supplied, but the uncertainty in Europe is keeping pressure on the price. OPEC+ is meeting in early August. The expectation is that they continue to pump oil at present levels or increase production slightly. Diesel prices have continued to fall from highs earlier this year. Refiners have increased production to respond to shortages. However, this came at the expense of gasoline production which has resulted in an increase to gas prices. Ongoing volatility is expected into the fall.
Propane inventories have been building throughout the summer but still remain below the 5 year average for this time of year. Expanded export options continue to impact the inventory levels and prices, in turn. However, somewhat surprisingly, prices have gradually dropped recently. It’s tough to determine if this will continue or not.
We’ve experienced a slight drop in propane prices throughout the spring as demand has cooled off. However, inventories remain well below the five year average. This is likely to mitigate any downward price movement, into the fall, if the gap isn’t reduced. Our brand new bulk loading facility in Stratford is projected to be operational this summer. This should ensure we are well supplied into the heating months.
Distillates and gasoline (to a lesser extent) prices have been extremely volatile throughout the spring. This surely correlated with low inventories and speculation on the geo-political climate. We saw prices reach all-time highs in May and have since retreated more than 20 cents. Demand will remain high through the summer driving months. Though, we hope to see prices cool off into the fall.
New regulations were announced by the government this week which will increase the ethanol content in gasoline. We are awaiting more details and will update accordingly. The provincial government has implemented a six-month gas tax holiday beginning on July 1. All road tax will be reduced to $0.09/litre.
Aided by a drop in demand, propane inventories have recouped throughout the month of April. In turn, the price of propane has dropped marginally and, aside from the carbon tax increase, appears to be about even with the price immediately prior to the invasion of Ukraine. Though the end of the month was chilly, expect May to warm up quickly and further alleviate demand. We hope to see the downward price trend continue, but time will tell.
After receding towards $100/barrel at the beginning of April, crude prices rose precipitously mid-month amid mounting NATO sanctions against Russia. Recent Covid-19 lockdowns in Shanghai and Beijing, along with speculation of increases to U.S. interest rates, have offset the increase in European demand and restabilized the prices. However, in response to the sanctions, Russia cut off gas supply to Poland and Bulgaria earlier this week. Expect more volatility to come.
Fickle propane prices continue into the spring, as we haven’t experienced any relief – which would be typical for the time of year. Inventory hasn’t quite rebounded and remains at a five-year low. However, It looks like there’s enough propane in the system to get us well into spring. Degree days continued to resurge in March and we can expect cooler temperatures into the early parts of April. Sadly, furnaces will have to stay on for the time being. Reduced demand in the coming weeks may help quell high prices towards the mean. Since the last update, fuel prices have endured the sharpest increase in decades. Sanctions and uncertainty around the war in Europe have drastically impacted the global market. Crude prices peaked in the second week of March. The increases retreated for a week, but then continued to climb into last week. The markets have cooled over the past weekend and we’ve seen a price decline heading into April. Where the prices go from here is anybody’s guess.
Earlier this month, freedom protests disrupted the propane supply-chain in Eastern Canada. Consequently, supply dropped and prices continued to climb.
Russia’s invasion of Ukraine further impacted the price of propane, as NATO economic sanctions, including the shutdown of the Nordstream 2 pipeline, have manipulated global markets.
February has been mild, overall, causing degree day gains to subside; though the next week expects to be cold in south-western Ontario.
Regarding fuels and distillates, we are experiencing record high prices at the pumps. Crude has exceeded $100/barrel. The conflict in eastern Europe will certainly further exacerbate prices. U.S. President Joe Biden has vowed to take corrective action to mitigate the price impact of the Ukraine invasion. However, as we continue to experience the economic impact of the Covid-19 lockdown measures, the market remains very much unpredictable.
Overall, the price of propane has risen another couple of cents. At this time, North American supply is considerably lower than the five-year average. However, the shortages are predominantly in the Gulf Coast, so we are well-supplied regionally. The omicron variant appears to be shifting towards an endemic stage, hopefully alleviating some burdensome restrictions on the economy. This will continue to fuel an increasing product demand as industries, such as travel, prepare to resume business. Colder temperatures, of late, also contribute to high demand. Degree day totals are still below average, but will likely catch-up; as we expect cold weather to extend through the end of the month.
In related news, the State of Michigan has withdrawn one of its Line 5 lawsuits. This may be a bellwether for the ongoing legal disputes.
Regarding fuels, crude oil prices continue to rise and now sit about even with the pricing prior to omicron and the BC floods. Like propane, demand will continue to climb as the economy opens up.
Due to unseasonably mild weather, the demand for propane has been reduced. We can expect a decline in prices if this continues into the winter months. Flood recovery in lower-mainland British Columbia is underway to restore the rail lines—meaning the refinery will soon return to full capacity.
The crude market has been volatile of late, with prices hovering around $70. Indicators suggest supply growth should outpace demand into 2022. However, uncertainty continues because of speculation on vaccine efficacy against the Covid-19 omicron variant.
For more information on fuel and propane, or to request a quote, please reach out to our team. From all of us at Core Fuels/Red Cap Propane: have a safe and merry Christmas and a happy New Year!
Worldwide oil and gas fluctuations in production, refineries, and shipment are resulting in the continued uptrend in prices. The energy crisis in China is reducing—or shutting down—oil and gas refineries in Asia, and Russia continues to control the flow of oil and gas to Europe. We are seeing multi-year highs in crude oil prices, which are reflected in the increased price at the pumps.
At a local level, Eastern Canadian propane stores continues to grow and are slightly higher than the previous year. Western Canada’s inventory is continuing to grow as well, preparing for the winter heating season, though inventory is not quite at the same level as last year. Propane normally flows from the west, so the higher inventory in the east is only logical. These global factors have caused the prices of propane to rise over the summer months, ultimately leveling off in October.
Regarding winter fuels, we recommend that you top up bulk storage tanks due to the seasonal change of fuel. Gas and diesel change seasonally to optimize the effectiveness of the fuel in different temperatures. The refineries do this gradually, and by the first week of December fuel is fully changed to winter fuel—making this the optimal time to fill your tanks.
Customers with added concerns regarding the market outlook for oil and gas are encouraged to contact the local experts at Core Fuels, Red Cap, and Waterloo County Propane.
The market outlook for fuel and propane is highly complex with many influencing factors. Distribution chains are global and elaborate. It starts with multiple methods of production, like offshore drilling and oilsands. Moving the crude product with large scale transportation methods involving pipelines, tanker ships, and rail cars to highly advanced and centralized refineries. Distribution of the finished product to the end-user has multiple levels of transportation and storage as well. There are many moving parts, but this is the world we live in.
The price of crude oil has begun to level out, even dropping slightly in August, however in September we are seeing marginal increases. Propane generally mirrors the uptrends and downtrends of crude oil, but not this year. While crude oil was flat in August and September, propane continued to trend upward. Inventory in eastern Canada continues to rise to meet winter demand. Inventory in Western Canada has dropped compared to last year.
Unfortunately, with increased carbon taxes and countless worldwide factors, we are experiencing unusually high prices for propane. Here’s hoping that the weatherman is correct in predicting 45% higher-than-average temperatures for the next few months.
Crude Oil prices are beginning to level out and have seen a slight drop in August. Demand for oil and gas continues to rise, but production has increased–resulting in a decrease in price despite reaching a 12-month high in July. 12 months prior, the price of oil sat at nearly half its current value.
The price of fuels, heating oil, and propane has followed a similar trajectory over the last 12 months. Traditionally, propane prices drop during warmer months which presents an opportunity for customers to fix or lock in rates for the next heating season. This summer, however, we have not seen this dip in price despite the Canadian inventory of propane seeing a steady increase from last month and being higher than last year.
The propane futures and forward selling prices indicate that propane prices will remain flat over the winter and experience a decrease next March. The weatherman is still predicting above normal temperatures in Southwest Ontario, which means you may want to consider closing your pool later this year and keeping your barbecue tanks full.