Volatility: The New Normal?
Jan 07, 2022
By Jeremy Peebles, V.P. of Petroleum
As we entered 2021, many people were looking forward to things getting back to normal. Instead, we were met with multiple new variants of Covid 19, a global supply chain crisis, political unrest, record high inflation, and soaring fuel prices, just to name a few. 2021 was littered with events that sent the market skyrocketing up then immediately crashing back down. Through all of it, the price of crude oil did continue to climb higher. On January 1st the year started with WTI crude priced at $47.18 a barrel and hit a 7 year high on October 25th at $85.41. Then crude suffered a dramatic plunge of $10.14 on Black Friday.
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So what direction is the market heading for 2022? If we focus on the fundamentals of supply and demand the global inventory of oil is at a very low level. However, OPEC Plus has slightly increased production and US production has been slowly climbing and estimated to return to the record levels of 2019. It will take time to dig out of the hole we are currently in, and OPEC is always a wild card, but supply should hopefully return to acceptable levels in Q3 2022. Demand is going to be dictated by how the global economies recover from the pandemic. There is also concern of major geopolitical altercations brewing between the US, Russia, and China. Many experts believe crude will be trading in the $70-$80 range for the most part, but if the last 2 years have taught us anything it would be hope for the best, prepare for the worst, and be unsurprised by anything in between. While price direction of fuel is uncertain, what is certain is that fuel prices will continue to be very volatile and reactive to a variety of issues that impact perceived supply/demand conditions around the world. The good news is GCC has some tools at our disposal to help navigate the peaks and valleys of the oil market. Our deferred monthly billing option allows you to fill your tank and only pay for what you use each month at the monthly average rack price. We also offer a number of fuel contracting options to better help manage your fuel costs going into the future.
Take advantage of these and other options by giving us a call. (620) 276-8301
As we entered 2021, many people were looking forward to things getting back to normal. Instead, we were met with multiple new variants of Covid 19, a global supply chain crisis, political unrest, record high inflation, and soaring fuel prices, just to name a few. 2021 was littered with events that sent the market skyrocketing up then immediately crashing back down. Through all of it, the price of crude oil did continue to climb higher. On January 1st the year started with WTI crude priced at $47.18 a barrel and hit a 7 year high on October 25th at $85.41. Then crude suffered a dramatic plunge of $10.14 on Black Friday.
So what direction is the market heading for 2022? If we focus on the fundamentals of supply and demand the global inventory of oil is at a very low level. However, OPEC Plus has slightly increased production and US production has been slowly climbing and estimated to return to the record levels of 2019. It will take time to dig out of the hole we are currently in, and OPEC is always a wild card, but supply should hopefully return to acceptable levels in Q3 2022. Demand is going to be dictated by how the global economies recover from the pandemic. There is also concern of major geopolitical altercations brewing between the US, Russia, and China. Many experts believe crude will be trading in the $70-$80 range for the most part, but if the last 2 years have taught us anything it would be hope for the best, prepare for the worst, and be unsurprised by anything in between. While price direction of fuel is uncertain, what is certain is that fuel prices will continue to be very volatile and reactive to a variety of issues that impact perceived supply/demand conditions around the world. The good news is GCC has some tools at our disposal to help navigate the peaks and valleys of the oil market. Our deferred monthly billing option allows you to fill your tank and only pay for what you use each month at the monthly average rack price. We also offer a number of fuel contracting options to better help manage your fuel costs going into the future.
Take advantage of these and other options by giving us a call. (620) 276-8301