Without a doubt, this past year has been a wild ride for energy prices…
Since December of 2014, crude oil prices are down $16.00 or 31%… Looking back to the high set in July of 2008, the contract is down $87.00 or 70%.
As can be seen in the Daily WTI crude oil chart below, a bottom was put in on the 21st of December at $33.88. The trade has since moved up $2.97.
However, the $64,000.00 question still remains, is there more down side?
If you can answer these questions.. You will know the answer..
- How long will Saudi Arabia allow these low crude prices to go …. They are going to start hurting for cash….
- Will Iran get the go ahead to start exporting oil…( Most believe that that potential is already priced in)
- What will happen in Syria?… What will ISIS do next?…
- Will be see U.S. crude production really decrease…
- What effect will a new President have on our economy?
- Will our ability to start exporting U.S. crude really have any effect on Global prices?
- Will the ongoing refinery problems seen on the West Coast be resolved soon?
I am constantly asked where the bottom will be … I, like you, will not know till it’s too late.. If the past is any indication though, I look for the upward trend to be swift when it is put in.
Here are our recommendations based on what we see today…
- Based on current cash prices, 50% ownership makes the most sense… Remember you won’t be burning this till March/ April. Look at cost averaging.
- Based on current contract prices, have 50% of what you would normally contract in the months of July, August and September contracted. Remember, contracting is NOT really about prices. It’s about risk management and being able to put together a more accurate budget for the 2016 farming year.
On this New Year’s Eve, I want to thank you for your business this past year. My staff and I feel it’s is a privilege that you allow us to be your Energy supplier of choice. While we are still waiting for final patronage numbers, the preliminary figures are in the 12 to 14 cent range.