Good morning!
Happy Friday! I’m back from vacation—and wow, what a few weeks it’s been! The crude oil trade has been incredibly volatile, with a lot of moving pieces on the global stage. Geopolitical tensions, new tariffs, and changes in production have all played a part in shaping what’s been a chaotic week in the market. The big story, of course, was President Trump’s “Liberation Day” tariff announcement on April 2nd. That decision rocked the markets. The executive order imposed 10% tariffs on imports from all countries, with higher rates on a few specifically targeted nations. Even though oil, gas, and refined products were exempt, the ripple effects across the broader economy were enough to drive crude prices lower throughout the week. China responded fast with a 34% tariff on U.S. imports by April 4th, and the European Union wasn’t far behind, proposing a 25% counter-tariff on a range of American goods. Needless to say, the market doesn’t like uncertainty, and all of this added more fuel to the fire.
Meanwhile, OPEC+ threw another curveball by accelerating and expanding their planned production increases. On April 3rd, eight members—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—agreed to boost production by 411,000 barrels per day starting in May. That’s a big jump, especially since the market was only expecting around 140,000. According to analysts, this number includes what was planned for May, plus two months’ worth of added supply rolled into one. With markets already shaky from the trade news, this only added to the downward pressure on prices.
The EIA’s April Short-Term Energy Outlook, released on April 10th, didn’t do the market any favors either. The agency cut its global demand forecast, citing the uncertainty around tariffs. The new outlook now expects demand to grow by only 0.9 million barrels per day in 2025 and 1.0 million barrels per day in 2026. Those are both downward revisions from their March numbers. The EIA also expects oil inventories to start building sooner than previously thought, projecting increases of 0.6 million barrels per day in Q2 and 0.7 million barrels per day in the second half of 2025. That’s a clear signal the market might be oversupplied heading into the back half of the year.
Here at home, the Chicago Mercantile Exchange traded gasoline and diesel closely with crude oil this week. But with several refineries still in maintenance, supply is tighter than usual. That’s keeping prices from falling as quickly as you might expect. I do think diesel prices at the pump will come down a bit in the near term, but gasoline is likely to hold steady until that large refinery gets back up and running sometime in May. Once it does, we should be in good shape heading into the busy summer driving season.
Propane spot prices have started to slip with warmer weather and the shift into summer economics. That said, Midwest inventories are still about 20% lower than last year, thanks to the colder winter we just went through. I still recommend holding off until summer fill season, as I expect prices to drop a little more. There’s definitely value in topping off your tank during summer—prices will be better than next season’s heating contract. And the good news is that, as of now, the 2025–2026 heating contract is shaping up to be slightly cheaper than what you paid this past year.
As always, if you have any questions, comments, or concerns, don’t hesitate to reach out. Have a great weekend!
Best regards,
Jon Crawford