What Happened In Crude Oil?

By Jeff Thompson… Monday, April 20, 2020, made history. Crude oil for the first time ever traded negative on the NYMEX futures contract. Crude oil has traded negative on occasion for physical barrels off the NYMEX. In those cases of negative trading for physical barrels, it typically is a high-sulfur grade oil that cannot be easily refined. The underlying issue for off NYMEX negative crude oil trading and NYMEX negative trading is the same, storage.

What Happened To Crude Oil Affects Propane Pricing reports BPN the propane industry's leading source for news and information since 1939
Typically, when a crude oil contract is getting ready to expire, a few days to a week before expiration, the market starts to work down the open interest in the contract. The open interest is simply the number of contracts outstanding for the contract month. Most of the time, with two or three days left, there might be 5000 to 20,000 contracts left in open interest. This normally is a manageable number of contracts.

On April 20, there were over 100,000 contracts open interest on the NYMEX May WTI crude contract. This is approximately 5 to 10 times the normal number of contracts that need to be cleared before trading ends for that contract month. With the national “stay-at-home” policy in place, crude oil and refined products have started to build at a much faster pace than normal. The projections and models suggest that larger than normal builds will continue for the foreseeable future. Additionally, the expectation of normal demands even after “stay-at-home” is lifted later this year is diminishing as every week passes.

This is creating a situation globally and in the United States that crude oil and refined product storages are filling to capacity. It is hard to fully grasp how full storages are in the U.S. and world. It is reasonable to think that by the end of May or June, storages around the globe will be full. This is why the market saw the price collapse of crude oil on April 20. There is nowhere to put the crude oil. In the next 60 to 90 days, there will be even less space to put crude oil in a refinery system or storage.

So, on Monday, April 20, the market had to figure out a way to accommodate 100,000 crude oil contracts that by Tuesday afternoon would be set for physical delivery in Cushing, Okla., the site for physical delivery of NYMEX WTI crude oil contracts. The only way for this to work was for price discovery in the market. The crude market had to figure out at what price these 100,000 open interest contracts for May WTI could get cleared.

What the market found out was not appealing or welcomed. It took a move down to –$40/bbl for the crude oil market to begin to clear out all the open interest in May. This means that a buyer of May 2020 WTI crude oil had to pay a counterparty $40/bbl to take the buyer’s crude oil after the contract value going to zero. This turned into an adult version of the children’s game “hot potato”—you hold it; no, you hold it—until prices dove down far enough that open interest in May cleared.

This also tells us that on that Monday, storage costs for crude oil in Cushing ran from $40 to $60/bbl. At $60/bbl storage for May crude, with a little bit of storage possibly still available, what will the June 2020 WTI crude contract do?

Here is a scenario that could easily play out for the June 2020 contract. With little to no storage available by the time June crude oil will show up at Cushing, it is possible the market sees crude oil priced well below –$40/bbl for a period of time over the next few weeks. At this point, the propane-to-crude calculation would become completely worthless. It would be a nonsense negative number.

What this means for propane is not nonsense. This summer could be one of the worst build seasons for propane in many years or decades. With crude oil full and refiners shutdown, the propane market will quickly see how little propane can build. One thing our customers want is stability. One thing the propane market is not going to get this year on the supply side is stability. I think we have tough times ahead.

Jeff Thompson is a business management consultant at Propane Resources in Mission, Kan. Contact Jeff at (913) 262-8531 or This email address is being protected from spambots. You need JavaScript enabled to view it..

Propane People "In The News"

Blue Cow Software New Propane People Janice TrombettoBlue Cow Software recently welcomed the addition of four new associates. Perry Bailes, Janice Trombetto, and Luziane Cavalcanti have joined the company as Implementation Specialists, to help train and support users of Blue Cow’s Ignite software suite of products. Richard Jesionowski, joins the group with over 30 years’ experience developing enterprise level applications. He has a passion for utilizing modern technologies and brings valuable skills to the Blue Cow Software team.  software developer has also joined the group.
BPN welcomes new Propane People In the News with Jeff Brunner joining Centae Associates as LPG acquisitions manager 05-2020

Jeff Brunner has joined Cetane Associates (Kent, Conn.) as a director and will support the activities of the firm’s origination and deal execution teams. Brunner brings more than 25 years of leadership experience in the delivery of propane, distillates, and HVAC services. He most recently served as a regional vice president for Energy Distribution Partners, and has held vice president and director level positions at Inergy Propane, Petro-Star Gas, and HOP Energy.

Rob Ragle has joined Energy Distribution Partners (EDP: Chicago) as a new regional vice president, with responsibility for leading operations management teams to achieve service, quality, and operational efficiency metrics. He has been involved in the propane industry for more than 19 years, serving from general manager to division president, and has been part of a number of start-up/step-up operations.
Propane People in the news welcomes Tony Cardenas as marketing manager for Energy Distribution Partners per BPN 05-2020
Jose Cardenas has been named as EDP’s marketing manager, where he will lead all marketing efforts. He formerly worked for one of the largest mechanical engineering firms in Chicago, updating its marketing efforts. Over the last 10 years, Cardenas has held marketing and design roles with ownership of the strategy and execution of integrated marketing plans that include building brand awareness, lead generation, and sales support.

BPN welcomes new Propane People In The News with Jason LeVine joining Ferrellgas on acquisition team 04-2020
Jason LeVine has joined Ferrellgas’ (Overland Park, Kan.) acquisitions department as a business development executive covering 13 states in the Midwest, South, and Southeast. LeVine was previously a regional sales manager for BASE Engineering for seven years. He is recognized for his expertise in terminal and truck automation and as a technical trainer.

BPN Propane People In The News Steve Whaley PERC 0420
The Propane Education & Research Council (PERC: Washington, D.C.) has added four staff members to its business development and industry relations units. Stephen Whaley has been appointed director of autogas business development, managing the over-the-road market portfolio for PERC. He will be responsible for growing propane autogas market share in on-highway light-, medium-, and heavy-duty vehicle markets. Whaley will focus on new product research and development; product launches; maintenance and growth in existing market segments; and potential new market development opportunities. For the past four years, he ran his own consulting company. Prior to that, as eastern U.S. regional sales manager for Agility Fuel Solutions in North Carolina, he helped develop Class 7 and 8 vehicle fleet markets for natural gas. He also trained and supported heavy-duty truck dealers with their fleet customers’ adoption into CNG and LNG implementation. Whaley was formerly director of business development for ROUSH CleanTech and oversaw research and business development for Blossman Propane.

BPN Propane People In The News J Calhoun PERC 042020
Joseph Calhoun, newly named associate director of business development, will lead PERC initiatives to grow propane demand by working directly with partners across multiple industries. He will be responsible for business, product, and market development activities, including outreach, communications, education, research, product development, technical integrations, and product commercialization. Before coming to PERC, Calhoun worked for RegO Products as business development manager for the propane and industrial gas markets, and prior to RegO, he was national business development manager for Robinson Pipe and Vessel. Calhoun has also served as the business development manager at TransTech Energy; regional sales manager for Ray Murray; director of corporate business development with Paraco Gas; and manager of customer service and logistics at American Welding and Tank. Calhoun has been CETP certified, is a former board vice president of the Mid-Atlantic Propane Gas Association, and has been a member of the Pennsylvania Propane Gas Association.

BPN welcomes new Propane People In The News with Erin Lee joining PERC 04-2020
Erin Lee has joined PERC as its industry relations coordinator, with responsibility for providing customer support for the fulfillment center and primary support for grant administration by performing initial application review and final report analyses. She will also handle general administration duties and assist with the preparation and planning for industry programs and meetings. Previously, Lee was senior quality assurance specialist with Sound-Exchange in Washington, D.C., for seven years, where she led Salesforce CRM training programs, developed business rules and processes, and provided customer service.

BPN welcomes new Propane People In The News Rachel Hirabik joins PERC 04-2020
Rachel Hrabik has been named business development coordinator. In this position she will administer PERC’s incentive programs and support the business development team. Most recently she was a sales associate for the Farm Bureau Financial Services in Syracuse, Neb., for four years, and prior to that, she was an account manager with Swanson Russell, where she worked on the PERC account.

Propane People In the news welcomes Sean Picou to Qualirty Steel Corp. reports BPN the LPG industry's leading source for news since 1939 05-2020Sean Picou, former director of operations for Quality Steel (Cleveland, Tenn.), was recently promoted to vice president of operations. Picou has more than 10 years of experience in the pressure vessel manufacturing business. He joined Quality Steel in 2013 when it acquired the assets of American Welding and Tank.

BPN welcomes new Propane People in the news with Sean Carr joining RegO Products 05-2020
RegO Products (Elon, N.C.) has named Sean Carr to its Americas sales team. He will serve as northeast business development manager, with responsibility for growing existing markets and developing new market opportunities through distribution. Carr was most recently sales director for WTWH Media in Cleveland, Ohio. Previously, he was the publisher of LPGas magazine.

BPN welcomes New Propane People In The News with Mike Walls joining Red Seal Managment Co. may 2020
Mike Walls has joined Red Seal Measurement Co. (Greenwood, S.C.) as its eastern regional sales manager. From his base in Atlanta, he will manage Red Seal Measurement’s Refined Fuels and LPG business in the Eastern U.S., in addition to the eastern provinces of Canada. Walls has been involved with sales, business development, and marketing for the past 30 years. He previously worked for Red Seal Measurement.
BPN's Propane People In the news reports passing of LPG industry veteran Jim Ham April 2020

IN MEMORIUM: BPN mourns the loss of propane industry veteran Charles Banks who worked at TEECO may 2020
Charles Banks, 65, Teeco Products’ (Irvine, Calif.) regional operations manager in Auburn, Wash., passed away Feb. 11. He was also the company’s official photographer at most events. He had a gift for capturing beautiful shots of people, whether in Teeco’s hospitality suite, on the tradeshow floor, or on the green. Mr. Banks was also very active in his church, where he helped mentor many young men.

First Purchasing Cooperative For Energy Retailers
 Launched In USA

(May 13, 2020) New England — IDEAL Energy is a Member-Owned Cooperative of local energy distributors that exists to deliver reliable and secure heating and transportation fuels through a qualitative, independent network.
IDEAL launches New England propane coop for buying power secure lpg supply Infographic reports BPN propane industry leading source for news since 1939IDEAL (Independents Delivering Energy Aligned Locally), works with local privately held energy retailers to help them manage the ongoing challenges of consolidation from large utilities and national energy corporations. Working together, IDEAL helps local providers defend margin, prevent volume erosion, share best-in-class operational expertise, and offers a Fuel-Local brand to gain more customers. Through cooperation with Fuel-Local branding assets, Members can better communicate the benefits of using local, independent providers to their customers.

Kris Magnusson, General Manager and Co-founder of IDEAL says, “One of our greatest Member benefits is our strength as a community by aggregating resources. For example, during this COVID-19 crisis, those members who applied for PPP, were approved to receive this assistance in record time. Our ability to offer guidance helps strengthen our Members’ core businesses.”

Ryan Jackson, COO of DF Richard in Dover, NH and Board Chair of IDEAL, stated, “My business has been directly helped by IDEAL. The Cooperative brings our company pre-vetted, industry-leading supplier and vendor partners which have already saved my business significant bottom-line dollars. IDEAL’s attention to Member best practices and development helps to maintain our edge over our competitors, while maintaining our own identity and brand. I would highly recommend Membership to all local, privately held independent energy retailers who are serious about upping their game against the competition and taking their business to the next level by participating in a genuine dealer-focused community.

About IDEAL Energy Cooperative:
Founded in October 2019, IDEAL currently has a Member footprint, along with supplier and vendor partners, spread throughout New England, New York, and Pennsylvania. IDEAL currently has buying power of more than 179 million distillate and propane gallons, and half a billion dollars in business revenue. IDEAL is ready to welcome new members, suppliers, and vendors. All of the Cooperative’s Members are proud to be privately held, and independently owned and operated. For more information contact Kris Magnusson at This email address is being protected from spambots. You need JavaScript enabled to view it. or Ryan Jackson at This email address is being protected from spambots. You need JavaScript enabled to view it..

Strategies For Working At Home During COVID-19 Pandemic

The coronavirus pandemic has changed life dramatically in countless ways. As many propane employees are adapting to safe social distancing while continuing the frontline work of delivering propane and taking care of customers, other industry members who work more behind the scenes in offices have been sent home to work in compliance with stay-at-home requirements for employees.
Tips For Working at Home during the coronavirus pandemic from BPN the propane industry's leading source for news since 1939
There are some in the propane industry who have been working at home for a number of years, including the entire staff of TSN Communications, a public relations firm that serves quite a few propane clients. TSN Communications’ clients include the Propane Education & Research Council (PERC), ROUSH CleanTech, Superior Energy Systems, Blue Bird, and the propane associations of Missouri, Illinois, and Virginia. According to TSN Communications’ president and CEO Greg Zilberfarb, 14 of the firm’s employees now work from home in Virginia, Texas, Arizona, Illinois, Montana, Florida, Pennsylvania, and Ohio.

Putting Experience Into A Book
Janice Brewster Weiser, who began working from home in 2000, joined TSN Communications in 2015. “I was working at a job I loved before [working at home], but my commute ate up three hours a day and telecommuting wasn’t an option,” Weiser stated in a book she authored recently: “Work at Home Happy,” which is available in an e-book format via Amazon. “As a new mom, I wanted a different life. So, I wrote my resignation, signed on to work remotely for a dot-com across the country, and set up an office in my home. Since then, I’ve worked as a full-time telecommuter and as my own boss, freelance writing and editing for a wide range of clients.”

With many years of experience performing her job from her home office, Weiser decided to write a book advising others who may find themselves with the opportunity to work at home. “I believe in writing about what I know,” she explained. “There are many people working at home for the first time right now. It can be fun and rewarding with a lot of flexibility, but there can be a lot of distractions to keep in check.” She noted that 1.8 million people worked at home at least part-time in the United States in 2005, but that the number had more than doubled to 4 million even before the coronavirus forced many more to change their working arrangements. “I tapped experts for advice, surveyed other teleworkers, and mined books and articles to gather 101 tips to make working from home the best possible option for you.”

The book’s four chapters tackle major aspects of working from home. The first chapter, “Happy Space,” discusses key aspects of the at-home work environment. Keeping kids’ belongings and other household items from cluttering the work desk is the first of many nuggets of advice. Further advice includes details on computer technology without corporate technical support at your fingertips; ergonomics for comfort and efficiency; using space efficiently; and keeping others in the house from being too much of a distraction. Looking and feeling healthy is encouraged, especially as video communications allow for plenty of visual interaction with the outside world.

“Getting it Done,” the second chapter, focuses on productivity. “For me, working at home motivates me to get work done so I can spend more time doing other things for myself and my family,” Weiser said. With advice from many, she acknowledges that some of the tips in Chapter Two may be contradictory and readers will need to decide which of the tips and ideas work best for them personally. One idea is to choose one important thing to focus on each day and see it through to completion. Others include blocking out the home distractions, writing down distractions in a journal to focus on later, keeping to-do lists on index cards, taking a 10- to 20-minute nap to refresh, avoiding social media becoming a distraction, and moving deadlines up a week to be prepared for unexpected demands on your time. She stresses that when working at home it is still important to get dressed and ready for work, the same as going to an office full of people.

In chapter three, “Happy and Healthy,” Weiser shares tips on making the work-at-home experience happy and healthy considering all the life challenges faced daily from both work life and personal life. Tips include meditation techniques, balancing time spent working with social and fun activity, setting aside a two-hour period each week just to think, taking a break from your home office midday for an activity outside the house, taking time to do activities that raise the heart rate, and taking time to interact with others socially. She notes that some who work at home enjoy having regular social outings with others who also work at home.
Strategies for Working at Home during coronavirus pandemic shared by BPN the propane industy's leading source for news since 1939
“Work Like a Boss,” the fourth and final chapter, focuses on increasing productivity and profit. With multiple clients, Weiser notes that workload can often be feast or famine. She discusses ways to fill downtime by increasing future projects. For those who are self-employed, she stresses the importance of being aware and on top of keeping the project pipeline full and doing all billing and tax work on a schedule to keep money flowing in.

Takeaways for TSN Team
In a discussion with BPN, Zilberfarb and fellow staff member Adrianna Amato joined Weiser to talk about the ideas shared in “Work at Home Happy” and how they apply them in their daily work. “For me, the tips on the height of computer monitors in relation to eye level have been very helpful,” Zilberfarb said. “With as much time as a person can spend at the desk each day, a few simple adjustments can prevent a lot of long-term neck pain.”
Strategies for Working from Home during Covid pandemic from BPN the propane indsutry's leading source for news since 1939
“The tips about setting up the workspace are very important,” Amato said. “They really help me get in the work mindset. Also, getting dressed each day and not just working in jammies really helps me be more productive.”

Weiser cites one of her tips that came from Francesco Cirillo in his book, “The Pomodoro Technique,” as a very useful technique for her. She sets a timer for 25 minutes to focus solely on a task at hand and then allows five minutes for a break. The name of the technique came about as Cirillo’s timer was shaped like a tomato, a “pomodoro” in Italian.

As for working as a group, Zilberfarb has been pleased with the low turnover of staff and the communication within the team at TSN Communications. He notes that about 11 staff members are full-time employees and three work part-time as outsources who receive a 1099 tax form. Weiser and Amato both cited Basecamp and Google Docs as online software programs that help TSN Communications’ team stay connected and efficiently share information. “Often we can communicate electronically, but it is also good to just pick up the phone and talk sometimes,” Weiser added.

Zilberfarb said the TSN Communications team and spouses or significant others get together once a year in Virginia for meetings and social activities. “It’s always good to have face-to-face time within our group,” Zilberfarb said. “I’m glad everyone can work in a home environment that agrees with them, but still have a way to communicate effectively with each other.”

Recently Weiser and TSN Communications offered free downloads to recipients of the TSN Communications’ newsletter for a five-day period and 241 people took them up on the offer. Books are now available for a nominal charge via Amazon.

“Work at Home Happy” by Janice Brewster Weiser is available at http://amzn.com/B07C6LM58J — Pat Thornton

Supply Situation Good Through 2020, But Watch Exports

Despite the volatility in the oil and gas markets, and in spite of expected declines, albeit slowly, in production, propane inventories should be in good condition for the remainder of 2020. So said an industry analyst, reporting on the supply situation after the first few weeks of turmoil caused by the oil price war and the COVID-19 pandemic.

Propane Supply Good Thru 2020 But Watch Exports reports BPN the LPG industry's leading source for news since 1939 05-11-20Darryl Rogers, vice president, midstream oil and NGL, at IHS Markit, spoke with BPN April 21. The oil price war between the Saudis and the Russians had begun in early March, evidenced by a surge in production. At the same time, the COVID-19 pandemic was expanding, leading to a drop-off in consumption.

The results could be seen in the price of crude oil.

As a point of reference, Rogers pointed to an earlier U.S. crude oil production peak and oversupply situation that occurred in 2015. At the peak, in April of that year, the price was $60/barrel. A correction followed, and by February 2016, the price was $30. That was down 50% in eight months, or roughly 6% per month.

Compare that to this year’s turmoil. When the oil price war started March 6, the price of crude oil was $46/barrel. A month later, on April 5, it was $13/barrel. The price had plummeted 72% in one month. On April 20, the March WTI contract price fell to negative pricing and as this was written, April 21, it was trading at around $4/barrel.

“This is just a crazy time,” Rogers noted. “The market is significantly out of balance.”

The price of propane fell too, although not as much, having been pulled down along with crude oil pricing. Propane and crude had been somewhat disconnected; propane had been at 30% of the value of crude in early March, but it was at 50% in early April.

END-USE MARKETS
The turmoil caused by the dramatic changes in both supply and demand will continue to resonate in propane’s end-use markets, Rogers said.

In the residential market, demand may uptick as consumers stay indoors during stay-at-home orders.

However, in the commercial market, there may be less demand as many businesses are shut down due to COVID-19.

In both residential and commercial, though, demand is lower anyway because the heating season is over.

In propane’s third end-use market, chemical consumption, demand is expected to fall. Propane has become a favored feedstock versus ethane, because its price fell with crude, but at the same time overall chemical demand will be down.
Darryl Rogers VP midstream oil and NGL at IHS Markit Warns to Watch Propane Exports in 2021 but LPG Supply secure for 2020 reports BPN
The decline in chemical consumption resonates in exports, propane’s fourth end-use market, so exports will decrease too.

“We may have more propane available here for the balance of this year, if there is less demand outside the U.S.,” Rogers noted.

UPSTREAM PRODUCTION
On the supply side, with lower prices and less demand for oil, U.S. upstream oil production is being reduced and is some cases shut-in. The current view at IHS Markit is that U.S. crude oil production, which is at 13 million barrels a day, will be at 10 million barrels a day by the end of 2020 and approaching 8.5 million barrels a day by the end of 2021.

Propane being a by-product of oil and gas production, its production will decrease by 200,000 or 300,000 barrels a day. The propane production will be relatively flat for the remainder of the year, though, because it will take time to drop.

“When upstream activity is halted, it takes months before we see a fall of production,” Rogers explained. “We won’t see that until 2021. Having said that, it will be down some in 2020 since refineries are shutting down because of reduced refinery production demand. Refinery propane is decreasing because there is less demand for refined product, like jet fuel, but that will come back.”

“Net-net, we expect a flat 2020 to slightly declining propane production. It’s a balance,” he added. “This leaves inventories in a relatively good condition for the rest of 2020.”

One thing to watch is exports. If chemical demand comes back and the arbitrage is such that the Asian market is willing to pay for propane, exports could rise while production remains lower.

Summing up, Rogers said, “In propane, there are low prices, but demand is off. How quickly will the demand markets come back? If they snap back, and there is less production, we could see the price rise. That is the key thing to watch.” — Steve Relyea