The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding
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24 FEBRUARY 2016 | FUEL OIL NEWS | www.fueloilnews.com S o far, this winter is turning into a dud. Though a late season save is not out of the question. On the plus side for the deliverable fuels industry, oil prices and propane prices are low and are likely to stay that way. But, the same can be said for natural gas, only with a little more uncertainty about future stability. Fuel Oil News interviewed experts for their perspective on what to expect in the coming months. We were assisted once again by Alan Levine and Brian Milne. We also had feedback from Sprague and various sources at AMERIgreen. Levine is the CEO and chairman of Powerhouse®, a group of seasoned energy experts and broker profession- als 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. A petroleum specialist for over 40 years, Levine is a highly regarded authority on the relationship of energy futures to cash petroleum markets. Milne, the editor of Schneider Electric's MarketWire—a real-time market and news service focused on U.S. oil product markets and relevant news and analysis—is also the editor of OilSpot, a weekly newsletter on the oil markets. Sprague responded by email with company perspec- tives on the areas covered. Sprague is one of the largest independent suppliers of energy and materials handling services in the Northeast with products including home heating oil, diesel fuels, residual fuels, gasoline and natu- ral gas. Over the years, Sprague has aggressively expanded its offerings to meet the ever-changing energy and logis- tics markets. Various AMERIgreen analysts also responded by email to the specific areas covered. AMERIgreen is an energy wholesaler in the Mid-Atlantic and New England mar- kets. It provides domestically-produced biofuels, refined fuels, propane, lubricants, hedging and marketing services to its customers. As should be noted, none of the projections outlined here are set in stone and when purchasing and hedging one should use this as simply a starting point and not the ending point in the decision-making process. Sprague submitted the following disclaimer that fully applies to all comments made in this article by all parties: These responses are provided for informational purposes only and are not intended as advice on any transaction nor is it a solicitation to buy or sell commodities. Sprague makes no representations or warranties with respect to the contents of such information, including, without limitation, its accuracy and completeness, and Sprague shall not be responsible for the consequence of reliance upon any opinions, statements, projections and analyses presented herein or for any omission or error in fact. Note: These interviews were conducted in late December. CRUDE OIL Crude oil is a critical metric as it forms the bulk, base price of refined products. The fracking revolution and commodities market reforms are still keeping prices down combined with a continued aggressive Saudi oil policy. The impact is enormous. There is currently a tremendous oversup- ply of crude—both in storage and from production—and that seems unlikely to change any time soon. Milne noted that US crude production was at 9.2 million barrels per day at the end of 2015. "That's a high number," he said. "It's down from the 9.6 million barrels in April, but that is still significant." "Crude oil remains range bound, $27.00 - $32.00, and anticipate it trading in that range more likely through the 2015-2016 heating season," said Ron Flick, AMERIgreen's wholesale petroleum manager. Fourth quarter could see a breakout to $40 to $50 range. If we had to pick a number it would be in the $25.00 range, despite Wall Street's call for crude to trade in the $10's. As always, geopolitical and/ or boost to the global economy would have an impact to the upside." A bottom, both spike-related and sustained, is a major topic of conversation in analyst circles. "I've heard a lot of talk that oil is going to break below $30 and I've even heard some talk of crude getting down as low as $18," Milne said. "We'll see if that happens. But if you look at your charts, well there you are." OFF-SEASON OUTLOOK 2016 FUELS Bears, Bears Everywhere By Keith Reid