Monthly Archives: July 2025

Tariffs and Diesel Disruption

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Good morning!

Happy Friday!  Crude oil markets traded within a narrow range during the week of July 21 to 25.  WTI crude finished the week down 3%, settling at around $66 per barrel.  While prices looked relatively steady, significant intraday volatility exposed deeper tensions building across both physical inventories and news headlines.

The biggest downward move came on July 22, when news broke that U.S.–EU trade negotiations had broken down. Fears of a potential 30% tariff resurfaced, rattling markets and sending WTI sharply lower. By the end of the week, sentiment rebounded somewhat as reports emerged of a tentative 15% baseline tariff agreement, alongside news of a landmark U.S.–Japan trade accord. These developments helped ease investor nerves and lent some support to crude prices. Still, the market stayed highly sensitive to trade headlines, and it’s clear policy risk continues to set the tone for oil price movement in the near term.

International dynamics added even more complexity this week.  In Europe, sanctions policy took center stage. The EU passed another sanction package on Russian crude oil and refined products.  Although the sanctions were designed to put pressure on Russian revenues, these measures had an immediate impact driving up the cost of diesel in Europe.  In addition to European sanctions, OPEC+ restored 400k barrels per day of crude in July and signaled plans to add 550k barrels per day in August. Those volumes, however, were largely absorbed by an imbalance in diesel inventory.  At the same time, the IEA revised its 2025 forecast for Chinese oil demand growth sharply downward, cutting expectations to just 80k barrels per day. That downgrade reinforced a growing sense that Asia’s largest consumer is nearing a plateau in oil consumption.

U.S. market fundamentals were tighter. Commercial crude inventories fell by 3.2M barrels, pushing stocks 9% below the five-year seasonal average.  And U.S. total liquids output reached a record 20.8M barrels per day. And drilling activity held steady, with only a minor decline in active rigs.  Demand trends painted a mixed picture. U.S. gasoline consumption was soft, averaging 9.5M barrels per day, down over 700k barrels from the same period last year. On the diesel side, things looked very different. While weekly implied demand appeared modest, monthly data showed that April usage ran nearly 5% above weekly estimates suggesting underlying freight and industrial demand remained solid. Inventories rose by 2.9M barrels, but still sat 19% below seasonal norms, which helped keep ULSD futures strong and widened the premium over gasoline.

In short, the crude market this week was more about refined-product tightness and geopolitical noise than about physical crude balances. WTI closed modestly lower, but the diesel market saw continued tightening.  Looking ahead, the market will be watching closely to see if OPEC+’s planned August supply increase can help offset diesel shortages, whether EU sanctions enforcement holds up, and if U.S. gasoline demand finds some legs.  Until we see a sharp downturn in global demand, diesel strength should continue to offer support for crude prices in the near term.

In local markets, gasoline and diesel prices continued to fall in the Chicago Spot market as refinery crack spread prices collapsed.  I believe we have peaked in price for the summer season as long as crude oil prices remain steady.  However, on Friday, the prompt spot month for Chicago changed to the September contract causing some basis support.  Therefore, I don’t expect to see much movement of retail prices on both gasoline and diesel in the coming days.

Propane inventories experienced a surprise draw this past week.  The announcement put an immediate floor on spot propane prices.  Summer fill prices are at the lowest price of the year and the same as last summer.  I highly recommend topping off your propane tank and locking in some gallons for the upcoming winter.

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

Best regards,

Jon Crawford

 

Continued Volatility Is The Name Of The Game

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Happy Friday!

Crude oil prices saw a modest increase this week, despite a market still dealing with a lot of uncertainty on both the supply and demand sides. The week started with serious supply disruptions in Iraqi Kurdistan, where drone attacks reportedly tied to Iran-backed militias knocked out nearly half of the region’s production for four consecutive days.  At the same time, the European Union rolled out its 18th round of sanctions against Russia. But enforcement is still questionable, and so far, these actions haven’t had the teeth to seriously dent Russia’s export ability. Meanwhile, President Trump threw in another wrinkle by giving Russia a 50-day deadline to resolve the war in Ukraine, threatening secondary sanctions on countries still buying Russian oil if a peace deal isn’t reached. The deadline gave the market some breathing room short-term, but traders are still uneasy over what could come next.

On the demand side, China reported a slowdown in economic growth in Q2, and the outlook for the second half isn’t looking too hot. Exports are dropping and consumer confidence is shaky. Since China makes up over 16% of global crude demand, their slowdown directly affects how oil trades. The concern is that even if supply tightens, slowing Chinese demand could soften prices, especially in the back half of the year.  Tariffs continue to be a wildcard. The administration announced new 25% tariffs on imports from Japan and South Korea, with more likely on the way for Canada, Mexico, and the EU. Energy products will most likely be excluded, but the uncertainty around broader global growth and trade relationships continues to hang over the market.  OPEC’s long-term view is that demand will keep climbing through 2050, with projections hitting 123 million barrels per day. The IEA doesn’t share the same opinions, calling for demand to slow and only hit around 104.4 million barrels per day next year. The difference in these forecasts continues to divide the industry on where we’re really headed.  Fuel consumption in the United States remains strong, especially in aviation and diesel. With summer driving season in full swing, demand is supporting higher gasoline consumption as well as higher global crude oil consumption.  In addition, drilling activities in the US are slowing down, supporting higher prices.

All-in-all, crude oil prices seem to be finding some support to move higher.  Diesel prices are climbing at a higher rate than gasoline.  My hope is that as summer demand decreases, we start to see inventory builds in diesel causing lower prices and higher supply going into the harvest season.

In local news, Chicago spot prices of gasoline continue to be weak in-line with other spot markets.  Even though demand for gasoline has been decent, supplies are outweighing demand keeping prices in check.   I don’t expect to see much movement on gasoline retail prices at the pump.  Diesel prices continue to whipsaw 20 cents back and forth.  Diesel prices are very volatile.  Prices were pushing back to recent lows and then climbed right back up.  I expect to see diesel retail prices at the pump to have high spreads depending on when retailers purchased fuel.

Propane spot prices fell this week due to another surprise massive build in inventory.  I truly believed that propane prices had found a floor.  Due to recent activity, we might see our retail price move lower.  I am stunned at the arbitrage between propane price and crude oil price.  I highly recommend taking advantage of the recent prices and contracting some heating gallons for the next season.

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

The Tariffs Have Returned

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Happy Friday!

I hope everyone had a great 4th of July weekend!  Crude oil prices saw moderate volatility between July 7 and July 11, ultimately rising 1.8% over the period. WTI began the week at $67.93 per barrel and closed at $68.45. That small net gain masked a week full of major market-moving headlines—ranging from OPEC+ supply shifts and renewed conflict in the Red Sea to fresh trade policy curveballs out of Washington and mixed demand signals globally.

On the supply side, the biggest news came from OPEC+. On July 5, eight member countries agreed to accelerate their production increases, committing to add 548,000 barrels per day in August—well above the previously expected 411,000 barrels per day. This marked a notable shift from the group’s earlier monthly hikes of 411,000 barrels per day in May, June, and July. OPEC+ framed the decision as a response to what it called a “steady global economic outlook and current healthy market fundamentals,” pointing to low oil inventories as justification. With this move, the coalition has restored 1.918 million barrels per day of the 2.2 million barrels originally withheld in voluntary cuts. That leaves just 280,000 barrels per day left to bring back online.

Geopolitical tensions also flared back into focus, with the first Red Sea shipping attacks since late 2024. Iran-backed Houthi militants in Yemen launched two major assaults. The Liberian-flagged Magic Seas was hit by drones, missiles, gunfire, and explosive-laden boats—ultimately sinking after its crew was evacuated to Djibouti. Another Liberian-flagged vessel, the Eternity C, was targeted over two days with drones and missiles, also sinking. Tragically, three crew members were killed and several others remain missing. The U.S. Embassy in Yemen accused the Houthis of kidnapping survivors. These incidents marked a renewed effort by the Houthis to disrupt global trade in retaliation for Israeli actions in Gaza. Given the Red Sea’s role in transporting roughly $1 trillion worth of goods annually, the attacks pushed a fresh geopolitical risk premium into oil prices.

Meanwhile, U.S. trade policy once again stirred market uncertainty. On July 7, President Trump announced a three-week delay in the implementation of new tariff rates, pushing the start date from July 9 to August 1. But the delay came alongside more aggressive measures: reciprocal tariffs between 15% and 46% on a wide range of countries, a 50% tariff on copper imports announced July 9, and new threats of additional tariffs on BRICS nations and other trade partners including Canada. These developments reignited worries about global growth and added another layer of volatility to the oil market.

The Energy Information Administration (EIA) also trimmed its 2025 oil production forecast, lowering it from 13.42 to 13.37 million barrels per day. The revision reflected softer oil prices, declining drilling activity, and mounting uncertainty tied to tariffs and rising OPEC+ output. Still, U.S. production remains on track to hit a record high this year, having already reached 13.4 million barrels per day in the second quarter.  Crude inventories in the U.S. posted a surprise build, rising by 7.07 million barrels—the largest increase since January. The size of the build caught markets off guard and added downward pressure to prices, signaling that supply was again outpacing demand despite peak summer driving season.  All told, it was an action-packed week. Looking ahead, until the trade policy picture becomes clearer, I expect continued volatility in oil markets.

In local markets, Chicago spot diesel price finally collapsed after a sharp runup. It looks like the earlier supply constraints have been resolved. I expect to see retail diesel prices trend lower next week. Gasoline demand, however, remains strong as we sit at peak summer consumption levels. That’s pushed gasoline prices up slightly.  I expect prices at the pump to hold steady around current levels for now.

Propane prices dipped a bit this week. Fundamentals remain weak due to strong national inventories running above the 5-year average.  And unless we get a very cold winter, the U.S. is well supplied. That said, we still recommend contracting some propane for the upcoming heating season—prices are currently in line with last year, and prompt-month values look to be at their lowest point for the year. If you can top off your tank by the end of August, now’s a good time to do it.

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

Happy 4th of July!

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Good morning!

I just wanted to take a quick moment and wish everyone a safe and happy 4th of July!  It’s going to be a hot one!  🙂  Also, I wanted to thank all our customers for thier business through the first half of the year!  Hard to believe that 2025 is half over!

I’m going to keep the update short and sweet.  Markets are always a bit wonky the week of holidays as traders take time off causing low liquidity.  Crude prices have been trading between $65-67/barrel.  Tariffs are getting worked out, the US economy looks good, but the dollar is losing value.  All of the these events are supporting crude oil prices.  However, OPEC meets over the weekend and expectations are for increased exports.  So far oversupply of crude oil in the world market seems to be keeping a lid on oil prices.  After the holiday weekend we will have a better idea of where things are heading.

Gasoline prices held this week so I don’t expect too many changes at the pump for the travel weekend.  However, diesel prices again jumped another 20+ cents/gallon this week on tight supplies.  Diesel inventories continue to be constrained.  I believe diesel prices will continue to be volatile throughout the next month or so.  Propane prices are holding steady with healthy inventories.  I still recommend topping off your tank this summer and contracting some gallons for the upcoming heating season.

Again, I hope everyone has a safe and happy 4th of July, and I will explore the markets in more detail next week after traders return to their desks.

Best regards,

Jon Crawford