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WTI crude oil is pushing $90 per barrel late this morning, as Qatar declared force majeure on gas exports, saying it may take weeks for them to come back online once they feel it is safe to do so, with a Qatari minister saying that oil prices could push as high as $150 per barrel if unrest in the region continues.
WTI closed just north of $81/bbl yesterday, which was a significant jump in prices from Wednesday's $74.66/bbl close. One week ago today, on February 27th, crude closed at $67.02. In essence, given where crude oil is trading as of this writing, WTI crude values are up nearly 40% in just one week. This may just be the start of a longer duration price increase, and with President Trump saying on social media last night that he is not interested in negotiation, but rather “unconditional surrender”, this war may be in its infancy.
Crude values are getting closer and closer to levels where negative economic impacts begin to take shape. Rising fuel costs is the most rapid form of inflation, as those costs can move higher several times intraday, which impacts the costs of most everything consumers use on a daily basis, as we discussed in yesterday's newsletter.
Propane's value to crude oil continues to plummet, with Conway being below 35% yesterday and TET just above 38%. However, that was before today's significant rise in oil prices. Propane's fundamentals are bearish, but C3 values will likely continue to be dragged higher by rising crude oil prices and the lack of an end in sight to hostilities.
