Amid imbalance in the oil market, farmers anticipating input needs for fall and beyond should weigh their decision to buy diesel before pulling the trigger.
“How low can we go? I don’t know,” Peter Meyer, PIRA Energy Group, tells Tyne Morgan on the “AgDay” Agribusiness Update. “Thirty-seven dollars? Thirty-five dollars? It’s hard. I know a lot of [farmers] are out there trying to say, ‘Should I be buying diesel, buying diesel, buying diesel?’ I think you buy diesel if it makes sense. It’s your personal preference. It’s not going anywhere, in my opinion.”
The challenges the industry faces are numerous. On the one hand, oil production remains high, while on the other hand, prices continue to fall.
“We have the Indiana refinery down, Canadian oil down below $40 a barrel just because that’s been backlogged,” Meyer explains. “Gasoline prices spiked in Chicago and in Indiana … . It’s tough. At PIRA, the PIRA line is that we are supportive prices here. But we don’t really see a huge spike. In my personal opinion, and when you talk to the fund managers, they’ve been short crude for a long time, and they’re going to wait to see it below $40 before they start covering those shorts.”
The recently announced Iran nuclear deal could also take demand off the world market by supplying oil to China, Meyer says. CNBC recently published a report explaining the possible influence of Iranian oil on prices.
Click the play button below to watch the complete interview with Meyer.