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16 FEBRUARY 2014 | FUEL OIL NEWS | www.fueloilnews.com FUELS By Keith Reid Late Winter–Summer Fuels Price Outlook Lower volatility and fairly moderate prices are likely to continue F uel Oil News typically runs two price outlooks during the year. The first is run in the early fall to give a perspective on what might be expected in the upcoming heating season. The second is run in the late winter to provide a look at the remaining months of the heating season, as well as any opportunities that might exist relative to hedging at this traditional time of opportunity. For our late winter outlook FON interviewed: • Alan Levine, the CEO and chairman of Powershouse®, a group of seasoned energy experts and broker professionals working in partnership to meet the business goals of its customers. He is an internationally recognized expert in pricing and business practices in the energy industry. • Brian Milne the editor of Schneider Electric's MarketWire—a real-time mar- ket and news service focused on U.S. oil product markets and relevant news and analysis, and also the editor of OilSpot—a weekly newsletter on the oil markets. • Pete Rieg, a risk manager for Crestwood, provided added perspective on propane. Rieg helps customers manage their propane and heating oil price risk. Crestwood connects fun- damental energy supply with energy demand across North America. • Sprague participated as well, but submitted a separate piece with added materials addressing some of the points we were looking to cover. Founded in 1870, Sprague is a leading independent supplier of energy products and related services in the Northeast. As should be noted (and undoubtedly most of the readers of this article have seen similar statements many times before), none of the projections outlined here are set in stone; hedging is not without risk and those making purchasing and hedg- ing decisions should use this as simply a starting point. Also, most of the prices noted date from early-to mid-January. FON: The price of crude is the primary factor in the price of refined products. We are producing abundant quantities of oil in the United States and legally most of that has to remain within the borders. Some analysts have predicted a significant drop in the price of crude. What do you expect to happen with oil prices as we move through the late winter into summer? Levine: There are a lot of people who think we're going to see prices for crude oil fall dramatically and move some- where into the $80 range and that is not out of the question, but I do not really look for any kind of massive selloff in the market and see prices move materially lower than perhaps somewhere in the $80 range. Even though we are less reliant on overseas oil we are still involved to some degree if for no other reason than we export a tremendous amount of product. So I do think there is a connection. I also have to point out that under current law we have very limited exports of crude oil and there is a lot of pressure from the industry to increase exports of crude oil. So far that hasn't happened, but should that happen of course we will be back again into the same close connection we have had with global movements in petroleum. Milne: We got over $100 late last year and this year it took a nosedive. I think Bank of America came out last year and said they saw a chance of WTI prices dropping into the $50 per barrel level over the next 12 to 18 months, but they see that as less likely than in the past. The problem is when you get below $85 there is the potential to see shut-ins and that limits the downside. They need a decent price to get the product moving into the markets. We could get into the $80 range — I wouldn't be surprised about that. But, it just doesn't look like it's going to bottom out significantly. I think we're talking the $85-$95 range in coming months.