Yearly Archives: 2025

Low Liquidity, Many Shrug

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Happy Friday!

I hope everyone had a safe and enjoyable Christmas!

Crude oil prices are set to close the holiday week near the lowest levels seen since 2020. While prices managed a small weekly gain, the move should be taken lightly given extremely low liquidity due to the Christmas holiday. NYMEX had a shortened session on Christmas Eve and was closed on Christmas Day, leaving most price discovery to GLOBEX trading. With limited participation, current price action will likely rebalance once full liquidity returns in the start of 2026.  The EIA’s weekly inventory report, normally released on Wednesday, will be delayed until Monday due to the holiday. The lack of fresh inventory data has kept many futures traders sidelined, further reducing liquidity and conviction in price moves.  From a macro perspective, the U.S. economy posted a strong GDP print of 4.3 percent, beating expectations. Growth continues to outpace inflation, which was the intended outcome of monetary easing. Even so, crude prices remain under pressure, reinforcing that supply dynamics are overwhelming macro support.

Geopolitically, the U.S. launched a surprise military strike on Christmas Day in Nigeria targeting Islamic State militants in retaliation for attacks on Christians. The strike was carried out in coordination with African governments. Despite the escalation, crude markets barely reacted, again highlighting how dominant oversupply has become in driving prices.

Venezuela remains another flashpoint. While President Maduro initially said he would defy U.S. threats to seize oil cargoes, several ships turned around midweek. The U.S. also began restricting inbound airline traffic to Venezuela, increasing pressure and leaving many citizens unable to return home. Over the weekend, Trump announced the U.S. would target a third Venezuelan tanker and did not rule out conflict. Maduro responded by saying shipments would continue regardless, with most cargoes heading to China, which has openly offered support.  On the sanctions front, the U.S. Coast Guard and military are preparing to seize another oil tanker linked to Iran.

Attention remains focused on Ukraine and Russia. Over the past weekend, U.S. negotiators met with EU leaders, Ukraine, and Russia. The U.S. stated progress was made, while Russia publicly disputed that claim. Tensions remain elevated after a Russian general was killed by a car bomb in Moscow, underscoring the fragility of any diplomatic progress.  Separately, the U.S. quietly granted India another month to continue purchasing discounted Russian crude from Rosneft, reinforcing the long-standing narrative that Russia continues to find buyers. Russia’s natural gas exports to China rose 25 percent in 2025, further demonstrating its ability to maintain revenue streams despite sanctions.

President Zelensky is planning to meet directly with U.S. officials to continue discussions around a 20-point peace framework. For the first time, Russia acknowledged it may be open to a territory swap, though major disagreements remain. Zelensky has indicated a willingness to consider the Donbas region as an independent, demilitarized zone, while Russia is not currently supportive. Ukraine continues striking Russian energy infrastructure, including gas-processing facilities, and has reportedly used drones sourced from the EU, pushing the limits of European involvement.  Despite these headlines, crude prices continue to hold steady. Many traders believe Russia’s strategy of flooding the market with discounted barrels is unsustainable beyond 2026, but as long as Asian demand persists and sanctions are selectively enforced, those barrels are likely to keep moving. Direct U.S. action against Russian cargoes is viewed as highly unlikely due to the risk of direct military confrontation.

Given current levels, crude is trading at what many would consider long-term value. For those with a longer-term view, layering in small futures positions for next year may be worth consideration considering current low prices and potential for global military conflict.

The Chicago spot market moved higher heading into the holiday travel week, tracking crude’s modest bounce. However, with liquidity so thin, this move may prove temporary. I do expect gasoline and diesel prices at the pump to potentially move higher over the weekend and into next week as holiday travel demand continues.

Propane prices remain relatively steady on the surface, but index prices have blown out higher. Logistics remain the main issue, with congestion on the Enterprise and ONEOK pipelines and reduced rail activity during the holiday week. Warmer weather has limited demand, keeping most retail storage levels comfortable. That said, any propane volumes purchased outside of locked-in index or fixed pricing are coming at a steep premium, as haulers are traveling much longer distances to secure supply. This has pushed retail propane prices higher. I expect retail prices to remain elevated until logistics improve.  The big test will be whether logistics will improve prior to the next wave of cold weather.

As always, if you have any questions, please feel free to give us a call.  Thank you and have a great weekend!

Best regards,

Jon Crawford

Knife Might Be Close To Falling On The Floor

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Happy Friday!

Crude oil prices are on track to decline for a second straight week, holding below $60 per barrel. While prices briefly bounced on news of a U.S. blockade tied to Venezuelan oil, the move faded quickly. Venezuela represents roughly 1 percent of global oil supply, and the current oversupply is more than enough to absorb any disruptions. Chevron continues to be exempt from the Venezuelan blockade, running exports openly from Venezuelan ports.  The market continues to make it clear that supply and demand fundamentals, not headlines, are driving prices.  The U.S. imposed another round of sanctions on Iran’s shadow oil fleet, but traders remain skeptical that the measures will materially impact flows. Iran has repeatedly found ways around sanctions in the past, and the market is largely betting on the same outcome this time.

Saudi Arabia continues to increase exports while cutting official selling prices. That combination is reinforcing the oversupply narrative heading into 2026. While OPEC maintains that it wants to avoid a price war, Saudi actions suggest market share is becoming a priority. Middle Eastern crude prices have also softened into year-end as producers work to keep barrels moving in an increasingly crowded market.  Western Africa continues to add barrels to an already oversupplied market, and traders are questioning where incremental demand will come from as most major buyers have supply locked up. Venezuelan crude floating storage has climbed above 20 million barrels, the highest level since 2022. These barrels serve as a buffer for China, but China’s weak economic growth limits urgency to take delivery.  India increased Russian crude imports by 3.4 percent in November compared to October. While India continues to source oil from non-sanctioned producers when pricing makes sense, Russia remains part of the supply mix despite sanctions.  China remains a major headwind for oil demand. Factory output growth slowed to a 15-month low, and retail sales posted their weakest performance since Covid. China has already filled much of its strategic reserves and is set to reduce fossil-fuel power generation for the first time in a decade. Without meaningful stimulus, weak Chinese demand will continue to pressure crude prices.

Geopolitical tensions remain elevated. European leaders committed $105 billion in additional funding to support Ukraine, both to limit Russia’s ability to expand westward and to maintain leverage in peace negotiations. Ukraine struck another Russian oil cargo ship this week, causing a fire and marking further escalation in attacks on Russian energy infrastructure. President Zelensky is scheduled to meet with a U.S. envoy in Berlin as talks continue around a potential framework for peace.  The U.S. announced its largest-ever arms sale to Taiwan, an $11.1 billion package aimed at reinforcing U.S. support. The move adds tension with China at a time when both sides are still trying to manage trade relations. China, meanwhile, has voiced support for Venezuela against the U.S. oil blockade, further complicating trade negotiations.  While the headlines initially pushed crude prices higher, the impact is limited.

On the US macro side, inflation rose less than expected, coming in at 2.7 percent. The softer print supports the idea that the Federal Reserve may slow the pace of rate cuts, keeping the dollar relatively strong. Even with the dollar sitting near two-month lows, crude prices continue to slide, underscoring how dominant the supply overhang has become.  The U.S. jobs report showed payrolls increasing by 84,000 after a decline in October, but the unemployment rate rose to 4.6 percent. The data suggests the economy is cooling more than many expected. Tariff uncertainty heading into 2026 continues to weigh on business planning and capital spending.  U.S. oil and gas companies are increasingly looking north to Canada’s Montney Basin for mergers and acquisitions. With low production costs and a large shale resource, U.S. producers see an opportunity to expand their footprint by acquiring companies already operating in the region.

The Chicago spot market remains very weak relative to NYMEX. Diesel differentials are extremely low, making spot purchases highly attractive. While limited production of #1 diesel has kept winter blending spreads elevated near $1 per gallon, #2 diesel prices are at the lowest levels seen in years and offer excellent value compared to NYMEX. Gasoline differentials are also very low, making both products strong buying opportunities heading into year-end.  If you see unusually cheap diesel at retail pumps, be sure to ask whether the fuel is being blended with #1. In my view, additives alone are not sufficient protection during sudden cold snaps. I expect diesel prices to continue easing into next week, while gasoline prices should remain stable and attractive for the holiday travel season.

Propane prices moved higher again as logistics across Wisconsin remain challenging. There is no supply shortage, but moving product to the right terminals continues to be difficult and driving prices higher. We are hopeful the distribution network begins returning to normal by year-end and prices will retreat accordingly. I believe we are nearing the top of the current propane price move. As always, please make sure driveways are clear of snow and ice and that there is a safe, clear path to your tank to ensure safe and efficient deliveries.

If you have any questions, comments, or concerns, please feel free to give us a call.  Thank you, and have a great weekend!

Best regards,

Jon Crawford

Knife Hasn’t Landed Yet

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Happy Friday!

Crude oil prices are set to close lower again this week, holding near the lowest levels seen in the past year. Despite a steady flow of geopolitical headlines, the market continues to shrug them off as oversupply remains the dominant force shaping price action.  The U.S. plans to seize additional oil tankers tied to Venezuela, and Marines recently landed on nearby islands as tensions escalate. Even so, the market reaction has been muted. Venezuela exports less than one million barrels per day, and with global supply already heavy, traders see little reason to bid prices higher.

Russia is facing mounting pressure as revenues from refined products may fall to their lowest level since August 2020. Sanctions are starting to bite more than they have in the past, limiting Russia’s ability to reroute barrels. That revenue squeeze could give Ukraine additional leverage at the negotiating table, especially as Ukraine continues targeting Russia’s shadow fleet. Another shadow tanker was attacked this week, bringing the total to five over the past few weeks. Ukraine is clearly using energy infrastructure and oil assets as leverage, even discussing the use of Russian oil assets to help fund Ukraine’s reconstruction.  Ukraine is also weighing a referendum on the Donbas region as part of a potential peace framework. The proposal would require the region to become a demilitarized zone, though there is no guarantee such a vote would permanently resolve the conflict. Meanwhile, Russia appears close to capturing Pokrovsk, a major logistics hub for Ukraine. Losing the city could weaken Ukraine’s negotiating position and likely prolong the conflict.

Global tensions continue to rise in Asia. After China reportedly aimed radar systems at Japanese aircraft, the U.S. responded by flying nuclear-capable bombers alongside Japanese fighters over the Sea of Japan. China has also conducted additional air missions near Japan, further escalating tensions. Any disruption in the region would have major implications for global trade and energy markets, though for now prices remain anchored by fundamentals.  Again, the IEA trimmed its forecast for oversupply next year, citing the possibility of stronger demand, but the market has largely dismissed the revision. With forecasts swinging back and forth so frequently, traders remain focused on what is visible today: large volumes of oil still floating at sea.

On the demand side, India continues to shift its energy mix. While still one of the world’s largest crude importers, India is now producing record levels of wind energy, weighing on long-term demand expectations. China’s consumer prices rose at the fastest pace in more than a year, driven by food costs, but broader economic growth remains sluggish, limiting oil consumption.  Weak Chinese economic growth and already-high inventories are limiting additional imports, even though China just posted its largest crude purchases since late 2023. India and Russia met again this week, with India continuing to buy discounted Russian barrels, though volumes have dropped sharply from roughly 1.7 million barrels per day to around 600,000.  Some market participants are even debating whether Russian and Iranian crude should be excluded from official global inventory counts, as floating storage surpassed one billion barrels. Ultimately, though, supply and demand still rule the market.  Russia cannot fully rely on China as a buyer.  There is also renewed discussion among the EU and G7 about potentially lifting the Russian crude price cap while aggressively targeting the shadow tanker fleet instead. Any easing of sanctions would unleash a large amount of discounted crude onto the market, though many traders believe this scenario is already reflected in prices.

The Federal Reserve cut interest rates as expected, sending equities and metals higher. Crude, however, sold off—an unusual reaction given the weaker dollar. The move reinforces just how heavy the supply outlook has become heading into 2026. Liquidity remains thin, speculative interest is low, and most market participants are firmly in wait-and-see mode.

Chicago spot prices continue to track crude lower. Diesel prices are near the lowest levels of the year, but winter blending is distorting retail pricing. The cost of #1 diesel used for cold-weather blending has surged, keeping pump prices flatter than expected. As a reminder, unusually cheap diesel at the pump may not be properly blended for extreme cold, especially sub-zero temperatures. Gasoline prices remain steady, and I expect retail gasoline to stay near the lows for the year.

Propane retail prices moved higher again this week due to allocation issues across the Midwest. There is no shortage of propane supply—this is strictly a logistics issue as product struggles to reach the right terminals. Prices are unlikely to ease until allocations improve and terminals can rebuild inventory. Warmer temperatures in the coming week’s forecast may help alleviate some of the pressure. With recent snowfall, please remember to keep driveways clear and maintain safe access to propane tanks to ensure efficient and safe deliveries.

As always, if you have any questions, comments, or concerns, please feel free to give us a call. Have a great weekend!

Best regards,

Jon Crawford

Sources: Wall Street Journal, Bloomberg, and Reuters

Don’t Try And Catch A Falling Knife

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Happy Friday! I hope everyone had a safe and enjoyable Thanksgiving!

Crude looks to close this week on the longest losing streak in years. OPEC meets this weekend, and market expectations are leaning heavily toward no additional production cuts. The pressure is on for the group to at least maintain current levels, but Saudi Arabia appears ready to cut prices further to keep its barrels moving—possibly to the lowest levels in five years. Saudi Aramco is even considering selling assets in what could be its most significant divestment ever, as falling crude prices begin to weigh on midstream infrastructure and equipment. Meanwhile, JP Morgan is now predicting OPEC may ultimately cut 2 million barrels per day in 2026 to avoid crude falling into the $40 range.

Israeli forces launched another counterterrorism operation in the northern West Bank and killed Hezbollah’s top military officer outside Beirut despite a brokered truce. The U.S. officially designated Venezuela’s Cartel de los Soles as a foreign terrorist organization, increasing sanctions on President Maduro and his officials. The move adds more pressure and signals continued escalation toward regime change or even potential military conflict with Venezuela.  Tensions remain elevated between China, Japan, and Taiwan. President Trump held calls with leaders from both Japan and China to help cool things down. Any military conflict in this region would be devastating to the global AI and semiconductor industries and could send oil prices sharply higher.

Ukraine and the U.S. continue pushing a peace plan with Russia. Progress is being made, but leaked information suggests Russia will not make major concessions, which helps keep a small amount of support under crude. Even so, traders remain convinced that whether sanctions stay or not, the market is still heading into oversupply by 2026. If sanctions are lifted, the flood of crude entering the market would be enormous.  India, which previously defied Russian sanctions, is committing to halt Russian crude purchases starting in December. However, they significantly frontloaded imports to beat the deadline. Russia is offering India its cheapest crude in two years. Shipping costs are rising as more sanctioned supertankers get stuck at sea. Iranian crude is also starting to build up offshore as China’s demand softens following heavy pre-purchasing of discounted Russian barrels. The volume of oil sitting on ships continues to break records, adding more pressure to prices. If Russian sanctions are lifted, the amount of discounted oil hitting the market would be tremendous, though many traders potentially see that as largely priced in.  Oil companies are now eyeing Argentina as the next major shale play. Early geological surveys suggest Argentina could hold nearly 50 percent more shale oil than the Permian Basin. Chevron has been in Argentina for about a decade, and more companies are evaluating rigs for 2026 under the region’s lighter regulatory environment.

Traders have abruptly shifted to pricing an 80 percent chance of a December Fed rate cut, even though the Fed remains deeply divided and the data is mixed. U.S. Producer Price Index data for September rose 0.3 percent, in line with expectations. Tariffs continue to muddy inflation data, raising costs for businesses, and a rate cut would not directly solve that problem. September retail sales grew only 0.2 percent versus an expected 0.4 percent. The slowing in retail spending is being linked to tariff-driven price increases. U.S. consumer confidence for November dropped 6.8 points to 88.7, and weak economic data continues to weigh on oil demand expectations. Black Friday is expected to be soft. Globally, British retailers reported their lowest confidence in 17 years heading into the holiday season.  Overall, economic data is not great but is it bad enough to push a rate cut through the Fed meeting in December?  That is the million dollar question.

The Chicago market sold off sharply again as crude collapsed. Chicago is awash in diesel, and I expect to see retail prices at the pump move lower. Even though we are in a “falling knife” price scenario, winter blending of #2 with #1 diesel will slow the speed of the drop. Gasoline followed crude lower and is now at its lowest price in weeks, and I expect more declines at the pump in the coming days.

Propane found a bit of support as colder-than-normal temperatures spread across most of the country east of the Rockies. Forecasts for the next 12 weeks continue to show colder conditions than last year, with a steady cold pattern but no major polar vortexes at this time. As we move deeper into winter, we ask all customers to please keep driveways clear of snow and ice and ensure safe, easy access to their propane tank to guarantee a safe and efficient delivery.

As always, if you have any questions, comments, or concerns, feel free to give us a call. Thank you, and have a great weekend!

Best regards,

Jon Crawford

Finally Fell Off The Cliff

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Happy Saturday!

Tensions continue to build overseas. Ukraine and Russia exchanged fire again, resulting in more casualties. Ukraine also signed a deal with France for 100 warplanes as the conflict shows no signs of slowing. Trump floated another proposal to end the war, but it appears dead on arrival since it would require Ukraine to give up land.  Russian oil exports resumed after being temporarily disrupted by Ukraine’s attack earlier this month. In Asia, China is increasing pressure on Taiwan through propaganda at home and heightened naval activity. Taiwan is boosting its own preparations in response to the growing threat of a potential invasion.

Japan and China are also escalating. China is limiting Japanese imports, and both sides have intensified rhetoric over Taiwan. For the first time in 50 years, Japan issued a formal warning about threats from another country, even suspending communication. Still, Japan sent a coalition to China this week in an attempt to calm tensions. Meanwhile, Israel resumed heavy bombing in Gaza and Lebanon, putting the ceasefire in jeopardy. Germany lifted its suspension on arms sales to Israel as the situation intensifies.

The IEA continues to forecast that OPEC will not cut production in 2026, which could create a record surplus of up to 4 million barrels per day. In the near term, 7.7 million barrels of sanctioned Russian crude are trying to reach India before November 21. A sanctioned Russian tanker even made a U-turn near Venezuela after a U.S. warship intercepted nearby raising tensions with Venezuela as well as targeting sanctioned Russian crude.  However, Russia is still finding buyers for its sanctioned oil—roughly 2 percent of global supply. China continues to take some volumes, and Iranian oil is also making its way to China through Indonesia. Chevron and Exxon have also entered the bidding for Russia’s Lukoil’s foreign assets, a move that would significantly expand Chevron or Exxon’s global footprint if completed.

WTI closed below $60 per barrel for the second week in a row. Despite low prices, the Permian Basin remains optimistic, especially with new technologies emerging that could unlock large additional reserves from existing wells.  The latest EIA report showed a draw in U.S. crude inventories, but global refining margins remain strong, easing any concerns about crude shortages. Diesel prices collapsed this week as oversupply finally hit the U.S. market following months of high refining margins on crack spreads. Gasoline also followed crude lower as demand concerns and oversupply weighed on prices.  The Federal Reserve offered little clarity again on whether a December rate cut is coming. Trump is lowering hundreds of tariffs on goods and foods to help cool inflation, and he continues to unwind several sanctions—both actions that could support a stronger dollar, which typically keeps crude cheaper. Fed officials signaled Thursday they are inclined to hold rates steady. October payrolls came in at 119,000 jobs, well above expectations, adding more doubt to the idea of a rate cut next month.

The Chicago spot market is finally running smoothly. All regional refineries are back online and ramping up output. Strong refining economics for diesel have triggered a major selloff in diesel prices, and gasoline has followed crude lower as oversupply builds and demand shows some seasonal jitters.  If crude price holds steady, I expect to see a significant drop in diesel retail prices at the pump over the coming week. However, winter blending with #1 fuel will start adding some additional cost at the pump. Gasoline retail prices should also move lower based on this past week’s crude price activity.

Propane continues to trade sideways, as it has for months. The EIA reported a draw on national propane inventories, and a strong cold snap has pushed through nearly three-quarters of the country, increasing demand. With forecasts still calling for a colder-than-normal winter, I don’t expect retail propane prices to move much in the near term.

If you have any questions or need anything, feel free to reach out.  Thank you and have a great weekend!

Best regards,

Jon Crawford

Bit Of A Pogo Stick This Week

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Happy Friday!

Crude oil prices saw a sharp rebound at the end of the week after Ukraine struck an oil refinery in Russia, knocking out roughly 2% of the world’s supply. The attack pushed prices back toward $60 per barrel after collapsing earlier in the week. Meanwhile, Russia continues its push deeper into Ukraine near the Pokrovsk region. Lukoil’s sale of foreign assets continues to find high demand, and Russia intends to use those funds domestically. Despite the recent export disruptions, Russia is still managing to ramp up refining capacity at home.  Russian oil is still officially hitting the market, even as China and India continue to avoid additional Russian purchases. Hungary was granted a sanctions waiver, which will give Russia an easy outlet for some of its floating storage and continue supporting production levels. At the same time, Europe has seen an uptick in sabotage attempts, cyberattacks, and drone incursions tied to Russia.  And in another development, Venezuela is also gearing up for potential conflict, adding more uncertainty to the geopolitical backdrop.

Prices collapsed midweek as the forward trading curve moved into contango, meaning prices farther out are higher than prompt barrels. That’s a classic oversupply signal, and funds also sold off positions for year-end tax harvesting and booking some gains. Global supply concerns grew after the amount of crude floating on ships hit 1 billion barrels. OPEC members Saudi Arabia, Kuwait, and Iraq also increased shipments to India, and the IEA warned of the potential for a record surplus next year. The combination sent crude prices sharply lower.  There was also news that Trump met with the Syrian president as Syria begins exporting oil again. If those barrels grow, they add yet another layer to the oversupply picture.

Despite all the talk of surplus, ExxonMobil and Chevron continue to ramp up exploration. Both are moving into areas that historically haven’t seen much drilling, such as Greece, and are also considering returning to Libya. Oil companies are betting that demand will continue rising over the long term. Their view is that prices may stay depressed for a year or so, but eventually rebalance and recover. OPEC has already revised its outlook to flat demand instead of rising demand, but the IEA now forecasts oil consumption increasing through 2050, giving producers confidence to keep drilling.  Still, China’s manufacturing and retail sales data remained very weak—some of the worst readings in years—which throws a bit of cold water on long-term demand optimism. However, the U.S. and China agreed to suspend port fees for each other, a sign that some trade tensions may finally be easing. That could eventually support each economy, but traders remain cautious for now.

The EIA’s latest report showed a large build in U.S. crude inventories, reinforcing the idea that surplus supply is on the horizon. Trump also opened additional areas of Alaska for drilling. Even though the government shutdown ended on Thursday—a potentially supportive event—prices still sold off sharply on Wednesday.  The Federal Reserve continues debating whether slowing payroll growth is the result of weaker demand for workers or tightened immigration. Most Fed officials lean toward weaker demand. There is a small amount of support for crude prices based on the Fed potentially holding off on a December rate cut, which keeps the dollar stronger and makes crude cheaper for international buyers. At the same time, there’s growing fear of weaker holiday sales weighing on the economic outlook.

The Chicago spot market has been extremely volatile. Massive price swings continue as refineries come back online and previously closed pipelines reopen. We are hopefully nearing the tail end of one of the biggest supply crunches southern Wisconsin has experienced in years. Gasoline retail prices should hold relatively steady, as gasoline hasn’t been impacted nearly as much as diesel. Diesel retail prices, however, are likely to move higher in the coming week, especially as winter-blended diesel enters the market.

Propane prices continue to trade in a narrow, fairly boring range. Retail prices have moved higher as early winter temperatures have boosted demand. Even so, when comparing BTU value across propane, diesel, and natural gas, propane remains a strong value at current prices. If you are a will-call customer, please check your tank more frequently as we start the winter season—this winter is already running 25 percent colder than last year, and usage can ramp up quickly.  We don’t want you to get caught with your tank running out!  🙂

As always, if you have any questions, comments, or concerns, please feel free to give us a call.  Thanks and have a great weekend!

Best regards,

Jon Crawford

Back Beneath The Floor

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Happy Friday!

WTI crude oil is looking to end the week below $60 per barrel, marking the second consecutive weekly drop. After briefly finding support midweek, prices slipped again as traders refocused on oversupply and soft economic data.

The war in Ukraine remains intense. Russia has gone on the offensive, targeting the city of Pokrovsk, a key transport and logistics hub for Ukraine. In retaliation, Ukraine struck a Lukoil refinery, escalating damage to Russian oil infrastructure and sparking a brief price rally on Thursday. But as the dust settled, traders shrugged off the event, believing Russia will eventually reroute its barrels somewhere.  Russian exports continue to slide under sanctions, and crude is piling up on tankers across the Asia-Pacific region. Turkey’s decision to scale back Russian purchases has only added to the pressure. A large amount of Russian oil now sits on ships waiting for a home, and if sanctions are ever lifted, a wave of barrels could flood the market.  Meanwhile, Venezuela continues to face political uncertainty. Hints of regime change could eventually open its oil market to more exports, adding to global oversupply. For now, Venezuelan shipments are falling, with most barrels still heading to China.

OPEC announced a small production increase, far less than prior moves, and confirmed there will be no new output hikes in the first quarter as global inventories continue to rise. Analysts now estimate a global surplus ranging anywhere from 200,000 to 3 million barrels per day next year.  Overall, OPEC’s total output rose in October, reinforcing the oversupply story. Traders digested the decision quickly and kept bearish sentiment in place. Saudi Arabia continues to chase market share, cutting its official selling prices to the lowest level in eleven months.

Adding to the glut, China’s manufacturing activity shrank again in October, marking six straight months of contraction. Export orders also fell at the fastest pace since May. China is simultaneously increasing domestic drilling to reduce import dependence, which ultimately adds more crude to the global market. India has also joined the ranks of secondary sellers, re-exporting Russian barrels and building up inventories at home.

On Wednesday, WTI fell below the $60 floor as U.S. inventories climbed, according to the latest EIA report. The ongoing government shutdown is adding more downward pressure to sentiment.  On the economic front, 42,000 U.S. jobs were added last month, signaling a still-healthy labor market. That strength makes it less likely the Fed will cut rates in December, keeping the dollar strong and commodities cheaper. Meanwhile, U.S. manufacturing contracted for the eighth straight month, which supports a bearish case for crude demand.  Market watchers also noted that the “Buffett Indicator,” which measures total stock market value against GDP, has crossed the 2.0 mark. The last time this occurred was in 2001, just before the market collapse. If equity markets were to correct sharply, it could spill into commodities and potentially trigger a “black swan” event for crude if the current surplus expands into early next year.

The Chicago spot market remains an absolute mess. The Westshore Pipeline, which supplies Wisconsin with refined products from Chicago, continues to be shut down. The outage has caused widespread shortages at terminals across south-central Wisconsin.  Thankfully, the harvest season is wrapping up, but diesel and gasoline prices have been extremely volatile, with massive intraday swings. Predicting retail prices right now is nearly impossible—most buyers are simply taking whatever diesel they can find.  Resupply is expected to improve next week as product starts flowing from both the southern and northern systems, which have also been on allocation for over a month. This 15-day stretch has been one of the wildest supply crises in the region in nearly a decade.

Propane continues to hover near the lower end of its trading range. Inventories built again last week as crop-drying demand tapered off, but colder weather is on the way. Forecasts are calling for a deep freeze across the Midwest over the next 7–10 days, which should quickly draw down national inventories and lend more support to prices.  Despite record storage levels, propane remains well-positioned to firm up once winter demand kicks into high gear.

As always, if you have any questions, please don’t hesitate to give us a call.  Have a great weekend!

Best regards,

Jon Crawford

Crude Oil Price Continues With Caution

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Happy Friday!

WTI crude oil started the week right where it left off Friday, trading around $61 per barrel. Prices climbed midweek, briefly testing the $65 ceiling, but couldn’t break through and slid back down to $61. Unless there’s a late-week surprise, WTI looks set to close the week almost unchanged — a flat finish after several sharp ups and downs.

Geopolitical risk continues to simmer.  Russia again launched drone strikes on Ukrainian energy infrastructure, forcing rolling power restrictions across the country. In the Middle East, Israel again ramped up attacks in Gaza, saying Hamas continues to violate the ceasefire. These developments added a mild geopolitical bid to crude prices, but traders are still largely in “wait-and-see” mode regarding the current global military conflicts.  Tensions also rose on the nuclear front. Russia tested a new long-range weapon designed to bypass missile defense systems and is reportedly considering deployment in response to sanctions. In turn, President Trump ordered the first U.S. nuclear test program in 33 years to match those of Russia and China. Such escalation could provide a floor under crude oil prices as investors price in higher global risk.

Despite ongoing sanctions, Russian oil exports remain steady, with barrels often held in transit or rerouted to friendly markets. Saudi Arabia continues to coordinate closely with Russia — a balancing act made harder by U.S. and EU restrictions. While Saudi officials warn that sanctions could push the market into deficit, the IEA continues to hold firm on their assessment of an oversupplied market well into next year.  Lukoil officially completed the sale of all its foreign refining assets this week, though domestic operations remain unchanged. Meanwhile, India has stepped in to fill lost Russian diesel exports, blending and re-exporting refined products to global buyers. Iran, trying to stay ahead of potential new sanctions, is offering deeper discounts to China to secure market share — though not enough to undercut Russian barrels outright.  All eyes are on the OPEC+ meeting this weekend. Unless the group surprises with fresh production cuts, analysts warn the market could face an even deeper wave of surplus later this year. Iraq continues to lift output slightly but remains within its official quota after months of overproduction. In a surprise, OPEC+ floated talk of a small output hike in November, which would likely keep a lid on prices.

It was a busy week on the policy front.  The Federal Reserve cut interest rates by another quarter-point, bringing slight relief to credit markets. However, the Fed also signaled that no further cuts are likely in December. The move initially weighed on crude prices as it strengthened the U.S. dollar, making dollar-denominated commodities more expensive for foreign buyers.  On the trade side, both the U.S. and Japan finalized a new trade agreement, and President Trump met with China’s Xi Jinping in Brussels, resulting in another round of tariff reductions. Still, China’s latest manufacturing data showed continued contraction — its slowest in more than six months — highlighting the weakness in industrial demand.  Even though the EIA reported large draws in U.S. crude and refined products this week, prices still moved lower. Much of those draws were tied to export activity, refinery outages in the Midwest, and strong seasonal demand from the U.S. harvest.

The Chicago spot market has been a mess this week. Diesel supply remains tight, especially at the Madison, WI terminal, which sits at the end of the pipeline from Chicago. That pipeline unexpectedly went down for maintenance, keeping diesel spot prices firm even as crude weakened.  Winter-blend diesel is now hitting the market as well, adding to costs. Gasoline prices soared as the Group spot market remains short on supply due to limited operations at a northern refinery. Expect diesel pump prices to stay steady at the pump, while gasoline prices should move higher in the coming days.

Propane continues to bounce along its floor price. Traders seem unwilling to push values much lower, even as crude remains weak. With winter demand beginning and crop drying still active east of the Rockies, propane prices have stayed resilient.  Although inventories posted a small build this week, colder weather could flip sentiment quickly. I believe the floor is set for propane — and any sustained cold snap will likely spark a bullish move.  If you’re a will-call customer, please start watching your tank levels closely. Even if your furnace is only running at night, usage can creep up fast, and we don’t want anyone running out as we head into colder weather.

As always, if you have any questions, please feel free to give us a call.  Thanks, and have a great weekend!

Best regards,

Jon Crawford

Rapid Rise In Price

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Good morning!

Happy Friday!  Oversupply continued to dominate headlines earlier this week, keeping crude prices pinned below $60 per barrel. However, oil is now on pace for a weekly gain after climbing back above that key $60 psychological level late in the week.

The big story came out of the White House, where President Trump imposed deep sanctions on Russian energy giants Lukoil and Rosneft, targeting nearly 500,000 barrels per day of supply. Both India and China have already said they won’t buy from those companies, and Russia responded by conducting nuclear readiness drills—a move that sent crude prices soaring about $3 per barrel midweek.  Ceasefire talks between Ukraine and Russia broke down once again, with Moscow rejecting the latest proposal and intensifying its bombing campaign. In addition, a gas facility in Kazakhstan experienced operational issues, prompting Shell and Chevron to suspend part of their production there. Kazakhstan has been one of the most aggressive OPEC+ members in overproducing, so this cutback could tighten supply and lend some bullish support to the market.  Elsewhere, Iran once again rejected Trump’s offer for peace talks, while Israel launched strikes in Gaza after accusing Hamas of violating the truce. Those developments didn’t move prices much, suggesting traders remain focused on global supply balances rather than Middle East flare-ups for now.

On the economic front, another major headline came from Washington, where the U.S. canceled all trade talks with Canada. The announcement initially pressured oil prices lower, as traders worried about additional crude backing up in the system if the U.S. stops purchasing Canadian barrels. However, after further reflection, markets decided the situation could actually be bullish if Canada is able to find alternative buyers.  The latest EIA report gave the market an extra boost, showing a draw in U.S. crude inventories, which helped extend the late-week rally. Meanwhile, the U.S. inflation rate came in at 3%, reinforcing expectations of an upcoming Federal Reserve rate cut, which would typically lend support to oil prices. At the same time, the ongoing government shutdown is beginning to hit federal paychecks, and that’s starting to weigh on consumer confidence and fuel demand expectations.  Midweek, trade optimism provided another spark as the U.S. and China scheduled new trade talks in Malaysia for Friday. Hopes for a potential deal helped lift crude prices earlier in the week, with traders betting that global demand may hold up better than feared.

Chicago product prices are finally easing after several weeks of volatility. The Whiting refinery is coming back online, helping to stabilize local supply and bring gasoline differentials down from recent highs. Diesel prices, however, have been more resilient due to strong harvest-related demand across the Midwest.  Meanwhile, Phillips 66 and Kinder Morgan are exploring new shipping routes to the West Coast to help fill that region’s refining shortfall. If that plan moves forward, it could divert barrels away from the Midwest and tighten Chicago supply for the foreseeable future.  For now, I expect gasoline prices to drift lower from recent peaks, while diesel remains firm into November.

Propane fundamentals remain soft, but the market is starting to transition into winter economics. Crop-drying demand is active, and colder weather is right around the corner. While inventories remain comfortable, I expect to see price movement by early November as seasonal demand ramps up.  Globally, as more countries ban Russian LPG imports, the U.S. will play a key backstop role in meeting international demand. That could create some upside potential in the export market later this winter.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.  Thanks and have a great weekend!

Best regards,

Jon Crawford

Bears Are Not Ready To Hibernate

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Good morning!

Happy Friday!  Crude oil prices held steady to start the week, supported by geopolitical headlines even as oversupply concerns grow louder. Washington remains locked in a government shutdown, and that uncertainty has weighed on markets broadly.  However, all geopolitical and economic data released this week was bearish and pushed WTI below $60/barrel with a fairly firm ceiling.

President Trump is expected to meet with both Ukrainian President Zelensky and Russian President Putin in the coming weeks.  Zelensky is reportedly asking for more advanced weapons like Tomahawk missiles, while Trump’s follow-up meeting with Putin in Budapest could prove critical for the ongoing ceasefire efforts. In the Middle East, minor flare-ups continue in Gaza, but the ceasefire remains largely intact. So far, it hasn’t been enough to push oil prices one way or another.

On the demand and supply side, the International Energy Agency (IEA) revised its global outlook sharply lower last week, citing a bigger-than-expected supply glut and weaker demand growth. Some agencies are now projecting an oversupply as high as 2.5% next year. The market consensus is that prices near or below $60 per barrel could eventually slow down U.S. shale activity, and the glut may persist through at least the first half of 2026.  OPEC continues to face pressure as members are being audited on their so-called “paper barrels.” The group has trimmed its official demand forecast but still insists that by 2026, demand will once again outpace supply.

Trade developments added another twist. The U.S. has placed new sanctions on certain Chinese crude imports, creating a brief wave of buying as traders positioned ahead of potential disruptions. Meanwhile, in a surprise announcement, China continues to take in as much Canadian crude as possible through its new western export terminal. India is reportedly considering halting Russian crude imports, which could temporarily offer some support though global prices, though history suggests Russia always finds a buyer somewhere.

Domestically, the latest EIA data showed a build in U.S. crude inventories, reinforcing the near-term oversupply narrative. Futures markets have now flipped into contango across the five-year curve—meaning future prices are higher than today’s. That structure encourages storage and near-term buying as traders look to lock in cheaper barrels now in hopes of stronger prices later.  The EIA did release a large draw in distillate inventories reporting that harvest east of the Rockies is in full demand season.

All in all, the market remains caught between potential geopolitical support and fundamental weakness. The wars may keep a floor under prices for now, but with international inventories rising and demand projections slipping, the near-term direction still looks soft for crude oil prices unless something major shifts in the headlines.

Chicago spot prices rocketed higher to end the week after the region’s largest refinery experienced an emergency shutdown. Products were already tight in the neighboring Group market from harvest, and the outage immediately sent gasoline prices up roughly 20 cents per gallon. Diesel prices also moved higher, helped along by strong seasonal demand from harvest. Given these conditions, retail pump prices are likely to move higher in the short term.

Propane prices held narrow as usual even as crop-drying demand picked up across areas east of the Rockies.  The latest EIA report showed a surprise build in propane inventories, but with colder weather approaching, demand should pick up quickly. While the market still leans slightly bearish for now, any sustained crop drying along with a cold snap could spark a sharp, bullish move higher in prices.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.  Thanks and have a great weekend!

Best regards,

Jon Crawford