Weekly Energy Update |
July 2, 2010 |
Edition 42
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PLC Energy Division News and Comment
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Follow up to “Beware of the Great Deal”
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- As you might be able to tell from my article last week, this topic really chaps my hide and I had another instance this week. A customer called me asking the price of Fieldmaster. After giving the price, the next question was, “Does that include bio?” This was strange when you consider that it has been the law for us to have bio in every gallon we sell for years now. After a couple more questions, I was told that some of our competitors are quoting two prices, one with bio and one without. We could discuss for hours whether or not bio is a good thing or whether the added cost is worth it, but the fact remains that it is the law for all fuel suppliers to include bio in the diesel they sell. As I see it, as an honest and ethical fuel supplier, we don’t have a choice. The big questions that pop into my head are, if a diesel supplier is unlawful and unethical enough to sell fuel without the bio, what else are they willing to do and who benefits? Are they going to put in the additives that they tell you they are? Are they going to short you on gallons? As a customer, am I really getting what I am paying for? Is this really the kind of company that I want to do business with? It truely is Buyer Beware! I admit that I get frustrated with this. At PLC, we strive to offer the highest quality products at competitive prices. When we find ourselves losing out to unethical and illegal practices, well, it just doesn’t seem right, but at least I can sleep at night knowing I work for a company that does the right thing.
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Prices Dropping
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- Recent news that the economy may not be doing as well as once thought has helped energy prices to drop recently. Obviously this is a good thing, however, I wouldn’t get to excited just yet. For most of the year, crude oil has pretty much traded between $70 and $80 and products have followed suit. We are nearing that $70 mark once again. For now, I would say to buy when we are close to $70 and hold off if we are up around the $80 mark. If we do drop below $70 and economic indicators continue to indicate that things may not be as great as once hoped, then I think we have an opportunity for some more downside to the market. Ride it out and layer in some product with a delivery or a contract at that point.
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Deep Horizon Spill Facts
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- For some interesting facts on just how big the spill in the Gulf is, click on the following link:
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Department of Energy Inventory Report |
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This week’s report had a couple of surprises with a larger than expected draw in crude oil and another large build in distillates. Despite crude oil showing a large 2.0 million barrel draw that somewhat backed up the API numbers, traders are continuing to sell. The draw looks to be the fault of decreased in imports last week. Gasoline stocks saw a build of 500,000 barrels versus the expected draw. Gasoline continues to see greater demand than last year but also saw a large increase in imports. The report also showed a larger than expected distillate build of 2.5 million barrels.
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(All Values in Bbls)
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Crude
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Gasoline
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Distillates
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DOE
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2.0 Million
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500,000
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2.5 Million
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API
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3.4 Million
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908,000
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3.9 Million
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Expectations
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900,000
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500,000
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800,000
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Refinery Utilization
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Down 1.0% to 88.4% capacity; expectations were for up 0.2%.
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4-Week Avg. Demands
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Gasoline:
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9.309 million bpd up 1.5% from last year
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Distillates:
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3.771 million bpd up 10.9% from last year
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Weekly Demands
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Gasoline:
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9.462 million bpd up from 9.241 million bpd last week
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Distillates:
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3.550 million bpd down from 3.784 million bpd last week
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Imports
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Gasoline:
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1.031 million bpd up from 844,000 bpd last week
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Distillates:
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183,000 bpd up from 171,000 bpd last week
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Crude:
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9.481 million bpd down from 10.112 million bpd last week
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Charting the Market |
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Propane stocks have been seeing average builds in recent weeks and we continue to track a pace to take us to the magical 60MM bbl area. This is the level that we need to reach to comfortably get through the drying and heating seasons.
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Topics Impacting Today’s Energy Market |
- Employment Report: Nonfarm payrolls fell by 125,000 last month (expectations had been for a 130,000 drop) as temporary census workers lost their jobs. Private sector payrolls increased by 83,000 (expectations had been for a 110,000 increase). The unemployment rate fell to 9.5% from 9.7% in May – expectations had been for it to rise 0.1%.
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- New sales contracts on existing homes fell 16 percent in May from a year ago after a federal tax credit for buyers expired. Pending home sales index plunged 30 percent in May after rising 23 percent the first four months of 2010.
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- Hurricane Alex: Alex made landfall as a Category 2 storm. Nearly 421,000 bpd of oil output was shut in as companies evacuated 74 production platforms for safety precautions. The Louisiana Offshore Oil Port (LOOP) suspended crude oil tanker offloading due to strong winds and high seas, but the suspension is not expected to last more than 1-2 days nor have much of an impact to area supplies.
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- China: The China Federation of Logistics and Purchasing reported its purchasing managers’ index (PMI) fell to 52.1 in June (from 53.9 in May). An expectation had been for a drop to 53.2 in the manufacturing index and shows that Beijing’s macroeconomic controls and the slowdown in the pace of the global recovery is slowing down manufacturing activity in the country – reducing demands for raw products and energy.
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- Europe: The European Central Bank announced it issued 131 billion Euros of 3-month loans The news has provided a boost to the euro and financial markets as it has reduced immediate worries over the health of banks – and brings optimism back to the global economic recovery picture.
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CLICK HERE FOR MORE INFO!!!
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PLC Weekly Price Changes |
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Product
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Change in Price
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B5 Ruby Fieldmaster Dyed Diesel
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$0.18
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B5 Wintermaster Dyed Diesel
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$0.18
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B5 Roadmaster Clear Diesel
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$0.18
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B5 Wintermaster Clear Diesel
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$0.18
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B5 Ruby Fieldmaster Dyed Diesel Jun/Jul/Aug Contract
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$0.15
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B5 Ruby Fieldmaster Dyed Diesel Sep/Oct/Nov Contract
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$0.18
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# 2 Fuel Oil
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$0.18
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#1 Fuel Oil
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$0.18
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Super Unleaded Gasoline (87 Octane)
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$0.10
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Super Unleaded Gasoline Farm Use (87)
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$0.10
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Propane (Home Heat) Contracts
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$0.00
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Propane (Home Heat) Scheduled Delivery
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$0.06
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Propane (Dryer) Contracts
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$0.00
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Propane (Dryer) Scheduled Delivery
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$0.06
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Additional Product and Service Offerings
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**Serving Agricultural, Industrial, Commercial and Residential Accounts**
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Refined Fuels |
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Contracts |
RFD |
Marketing Info |
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Standard Delivery |
Tanks & Pumps |
Warranty Plan |
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Propane |
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Crop Dryer Contracts |
Equal Payment Plan |
Safety Checks |
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Leak Checks |
Home Heat Contracts |
Marketing Info |
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Lubricants |
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Lube and Grease Handling Equipment |
Passenger Car Lubes |
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Agricultural Lubes |
Concrete Form Oil |
Gear Lubes |
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Trucking Lubes |
Vegetable/Soy Based Lubes |
Bulk Delivery |
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Copyright 2010 Prairie Lakes Coop, CHS Service Center.
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The information in this document it taken from source which we believe to be reliable, but is not guaranteed by us as to the accuracy of completeness and is for informational purposes only.
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