News > Garden City News > Petroleum Update - March 2020

Petroleum Update - March 2020

Mar 05, 2020

By Lakin Dreiling

Vice President - Petroleum
Garden City Co-op, Inc.

Today I wanted to give you a quick update on the petroleum department and what we are currently seeing in the markets and our predictions going forward into the spring.  The staff has been busy preparing for 2020 and filling patrons’ tanks in preparation for a busy crop season. We are currently in our low demand period for refined fuels and we have seen a significant drop in the price of diesel since December 2019.  Spot prices have dropped over 0.35 cents to date, the lowest we have seen since 2018. However, U.S. distillate stocks, at 143 million barrels are sitting lower than the 5-year average which suggest there may be some tightness in the distillate markets going forward.  Currently, it is a great time to look at filling your tanks going into the spring and looking at contracts for your fall harvest demand. 

China trade war and fears of the coronavirus have been the markets headlines throughout the winter months with OPEC talks of reducing current output even more, continues to provide a geopolitical market environment.  With the coronavirus cutting energy demand and industrial output in China, we have seen great fears of their economy slowing down and imports of crude decreasing significantly.  Travel restrictions within China have deeply impacted demand for energy in the region with analyst predicting a reduction of 35% in the first quarter vs. last year. 

With the U.S. now being one of the largest exporters of crude oil, this put fears into many producers of a potential supply glut as tankers sit in ports waiting to unload crude and fuels for the nation’s refiners.  The EIA forecasts that OPEC will curb oil production by 0.5 million b/d after their meeting in March through May of 2020 due to lower than expected oil demand through the first part of 2020.  Global fuel inventories dropped by roughly 0.1 million b/d in 2019 and the EIA expects they will grow by 0.2 million b/d in 2020 due to the lower demand growth and strong non-OPEC oil supply growth such as the domestic growth we are seeing here in the U.S. over the past several years due to more enhanced fracturing technology.  Recently the U.S. imposed sanctions on the Russian oil company Rosneft for adding Venezuela crude and bypassing the current sanctions the U.S has on them.

Overall, we are not in a complex market fundamentally once you take out all the geopolitical news and risk.  The market seems to be well balanced with WTI trading between $51 and $57.  In our opinion, consumers who take advantage of contracts at the lower end of this trading range will benefit from the balanced market once any more geopolitical news hits headlines throughout the year.  Please give us a call at 620-276-8301 if you have any questions regarding current market information.  We have a dedicated and knowledgeable staff to assist you in all your petroleum needs.  We take pride in getting our premium products to you efficiently, safely and accurately throughout the entire transaction from delivery to billing. 

Once again, please give the great staff at your petroleum department a call at 620-276-8301 if you have any further questions regarding any of your petroleum needs.

Lastly, I want to thank you for your business and wish you and your family a happy, safe, and prosperous 2020.    

 



Read More News

Nov 30, 2020
Have you took advantage of our customer portal? Get access to invoice detail (beyond the paper statements), ACH Setup, Real-time invoicing and more! Information at your fingertips whenever you...
Oct 26, 2020
Earn a $50 gift card for every 100 gallons of high-quality Cenex oils, hydraulic fluids, gear lubes and greases you buy between November 1st 2020 and February 28 2021.
Sep 23, 2020
The Garden City Co-op, Inc. is pleased to announce the hire of Michael Wisner as the new Vice President of Grain.