March came in like a lion, lets hope it goes out like a lamb…..
So far this month, front month Diesel shot up over $1.80 to peak just above $4.60, then proceeded to fall $1.60 to just under $3.00 and now has risen back over $1.00 to be currently trading just north of $4.00. What’s even more wild are the intraday swings. Believe it or not, yesterday morning we were actually negative for a bit earlier in the session before finishing up over .25 on the day. Today is opposite thus far, being up almost .10 early on, and now trading down .04.
Obviously the Russian invasion is still the main catalyst for the rise, as fears linger that the US does not have a quick enough reaction time, or a plan in place to domestically produce more should this conflict linger. Unfortunately, politics are weighing in on some rational decisions. Many sanctions put in place have special caveats carving out energy like todays joint action from the European Union “to date has carved out sanctions exemptions to allow continued imports of natural gas and oil from Russia, given the difficulty and expense of quickly finding alternative supplies “ . Yesterdays big rise was after the weekly inventory report that showed large draws in all products, again not fundamentally tied to any Russian sourced product, just the fear of our inability to react.
I am asked 50 times a day, What is going to happen? I honestly wish I knew, but what I can say that from a business perspective is that you need to be nimble and able to pivot. While I doubt this is going to be the new normal and will likely short lived, the effects of these records prices are going to linger for some time.