The market’s loved what the Fed decided not to do about interest rates yesterday, March 18th. The U.S. Dollar fell hard to about 95 and oil jumped up to $45.34/barrel. Things have changed directions today, however. The fundamentals driving this market (over supply) have not changed. Storage is filling up and the dollar is expected to continue to get stronger.
For propane we also need to remember that at this time of the year inventories usually build due to warm weather and low demand. This can cause propane to move counter to petroleum products and can offer an opportunity to pre buy for the fall and winter. Currently propane is only about 50% the cost of crude.
Last week gasoline demand increased by 744,000 barrels to 9025 million barrels according to the last government inventory report. This increase in gasoline demand moved the four week average over 8.8 million barrels per day. With pump prices at least a dollar a gallon lower than a year ago, it is no surprise that demand would be picking up, now over the five year average.
Refineries continue to enjoy good margins so they can be expected to continue to buy cheap crude and turn it into refined product. Exports will continue at a healthy rate as a result. Do not expect fuel supplies to get tight any time soon. We may see local problems due to refinery issues from time to time, but overall we continue to be awash in fossil fuels.