Monthly Archives: August 2025

China Is Flexing Some Muscle

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Good morning, and Happy Friday! I hope everyone has a safe and enjoyable Labor Day weekend!

This past week was fairly steady for oil prices, with WTI holding around $64 per barrel. Traders remain cautious as global economic and geopolitical issues continue to play out.  On the geopolitical front, India openly defied U.S. sanctions, announcing it will continue purchasing Russian crude oil in September. While buying discounted Russian barrels may look attractive, the sanctions imposed on India could easily erase any savings from cheaper oil. India’s move sends a clear message that the U.S. cannot dictate where they do business. In a show of solidarity, Xi Jinping, Vladimir Putin, and Narendra Modi met to reinforce their alignment against U.S. sanctions. Looking ahead, Xi, Putin, and Kim Jong Un are scheduled to meet next week to signal a deeper military alliance with the West in mind. The trend is clear: countries are rallying around China, not just in trade but also in mutual security commitments.

On the supply side, Russia managed to reopen its pipeline to Slovakia and Hungary after being shut for seven days. It is currently operating at 50% capacity but is expected to be fully functional soon. While Ukraine has succeeded in disrupting some Russian energy infrastructure, Russia’s export capacity remains strong with no shortage of buyers. At the same time, China’s growing investment in solar, wind, and nuclear suggests that its need for imported crude will decline in the years ahead. Combine that with OPEC steadily increasing production, and it’s no surprise that more than half of U.S. energy economists now predict an oversupplied oil market by 2026. Goldman Sachs even forecasts crude prices could fall as much as 15% next year.

Domestically, the EIA reported draws in crude, gasoline, and diesel inventories. Normally this would support higher prices, but the market reaction was muted as traders weighed ongoing economic headwinds. Inflation ticked up to 2.9% last month, while consumer spending also rose—but largely in line with inflation, making it difficult to gauge real growth. Summer spending patterns also skew the data. Looking ahead, next week’s jobs report will be closely watched, especially after President Trump dismissed the head of the reporting department earlier this month.

For now, crude oil continues to trade in a narrow band, with bullish and bearish signals offsetting one another. September could prove pivotal: if the Federal Reserve cuts rates, prices may find some support. But if global production outpaces demand, WTI could slip below $60 per barrel.

The Chicago Spot Market rolled to the October contract this week, with basis largely unchanged. As summer gasoline demand winds down, I don’t expect any major price swings. Prices have also normalized following last week’s BP Whiting outage, and I expect retail gasoline to remain below $3 per gallon through the holiday weekend and into next week. Diesel prices inched higher, supported by a surprise national inventory draw and the approaching harvest season. Expect pump prices for diesel to climb slightly in the days ahead.

Propane spot prices remain in a narrow range, but forecasts point to a colder-than-normal late September and October, with the possibility of early snowfall. That combination, paired with strong crop drying demand, could quickly push propane prices higher. I strongly recommend filling your propane tanks now while summer pricing holds, and also locking in contracts for the coming winter. We will continue writing contracts through early September.

As always, if you have any questions, comments, or concerns, please don’t hesitate to reach out. Wishing you and your families a safe and enjoyable Labor Day weekend!

Best regards,

Jon Crawford

A Surprise Move Higher

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Crude oil prices managed to break a three-week losing streak, with WTI crude oil climbing nearly 4% last week from about $61 to $64 per barrel. The rebound happened even though worries about too much supply and slowing global demand continue to hang over the market.  A big reason for the move higher was renewed uncertainty in the Ukraine war. Hopes for peace talks faded as both Russia and Ukraine blamed each other for stalled negotiations. Russian airstrikes near the EU border and Ukrainian strikes on Russian oil facilities added fresh risk, which helped lift oil prices.  U.S. trade policy also had an impact on prices this past week. The Trump administration confirmed a new 25% tariff on Indian goods starting August 27. The move is meant to pressure India, which gets more than a third of its oil from Russia. As a result, Indian refiners have been pulling back on Russian barrels, leaving space for Chinese buyers to scoop them up.

On the demand side, China’s economy showed signs of slowing.  Factory surveys showed contraction, pointing to falling exports and weaker manufacturing. Markets were also disappointed when China’s central bank left lending rates unchanged instead of cutting to boost growth.  Oil also got support from U.S. data and supply news. The government’s weekly oil report showed much bigger-than-expected drops in crude and gasoline inventories, while refineries ran near full tilt. That news sent oil prices higher right away. On top of that, U.S. manufacturing activity jumped to its highest level in more than three years, pointing to stronger industrial demand for energy. The housing market also perked up, with more sales and cheaper mortgages hinting at more construction activity and higher diesel use.  The U.S. labor market, however, looked a little softer as more people filed for jobless claims. That raised some concern about demand, but it also increased expectations that the Federal Reserve might cut interest rates soon—something that generally gives oil prices a boost.

For now, the market is still being driven by headlines and hopes for stronger demand. But looking ahead, world oil production is expected to move into surplus later this year and into 2026. For many, that means it may be best to stay patient and wait.

Closer to home, BP’s Whiting refinery near Chicago was forced to shut down gasoline production after flood damage. Supplies were already tight heading into the end of summer, and gasoline prices jumped more than 30 cents per gallon in just two days. While reports suggest the refinery could restart next week, it will take some time for gasoline supplies to catch up. Expect pump prices on gasoline to stay higher as we head into Labor Day weekend. Diesel wasn’t directly affected by the outage, though prices are still inching up in line with crude oil.

Propane price also followed crude oil higher. Even though the EIA reported another build in U.S. propane inventories, overall stocks are still below where they were a year ago. With farm demand expected to be strong and the Farmers’ Almanac predicting a colder-than-normal winter, it’s still a smart move to top off propane tanks and lock in supply ahead of heating 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

So Much Head-Spinning Data

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Good morning!

Happy Friday! WTI crude oil prices didn’t move much this week, ending right where they started at about $63 per barrel. There was a lot of news—both from around the world and here in the U.S.—that pushed prices lower, but strong U.S. economic numbers helped keep them from falling further.  The biggest headline was the Trump–Putin Alaska Summit, which kicked off today. Traders were watching closely for any signs of a peace deal in Ukraine. President Trump warned that if President Putin refused to end the war, the U.S. would hit Russia with “severe consequences,” including extra sanctions on countries that buy Russian oil. Most traders think these sanctions wouldn’t cut Russia’s sales much, since they believe Russia will find other buyers, so the market reaction was more on the bearish side.

China’s economy also showed signs of slowing down, which could mean less demand for oil. In July, industrial production (how much factories made) grew just 5.7% compared to last year—down from 6.8% in June and the slowest since November 2024. Retail sales (what consumers spent) grew only 3.7%, down from 4.8% in June, marking the weakest growth since December 2024. Investment in infrastructure and other long-term projects rose just 1.6% in the first seven months of the year, compared to 2.8% in the first half. The unemployment rate also crept up to 5.2% from 5.0%. All of this signals that China’s economy is losing steam—and that could mean less oil demand from the world’s second-biggest consumer.

Here in the U.S., the economic numbers told a different story—one that gave oil prices some support. On August 12, the government reported that inflation (measured by the Consumer Price Index, or CPI) rose 2.7% in July from a year ago, just under the 2.8% economists expected. But core CPI (which leaves out food and energy) came in higher at 3.1%, compared to the 3.0% forecast. A couple of days later, the Producer Price Index (PPI)—which measures inflation for businesses—jumped 0.9% in July from the month before, far higher than the 0.2% expected. That was the biggest monthly increase since June 2022, pushing the annual PPI up to 3.3% from what analysts thought would be 2.4%.

Meanwhile, the job market stayed strong, with weekly jobless claims falling to 224,000—better than expected and down from 227,000 the week before. Retail sales in July rose 0.5% from the previous month, exactly as predicted. Overall, this strong U.S. data makes it more likely the Federal Reserve will hold off on cutting interest rates in September, which helped keep oil from dropping further.

Another big story came from the International Energy Agency (IEA), which warned about a major oversupply of oil heading into late 2025 and 2026. The IEA expects oil inventories to grow by more than 2 million barrels per day on average in the last quarter of this year and the first quarter of next year. It also raised its forecast for global oil supply growth to 2.5 million barrels per day, while lowering its estimate for demand growth in 2025 to just 680,000 barrels per day. The slowdown is especially sharp in China, thanks in part to the rapid shift toward electric vehicles. In the U.S., gasoline use was down 1.5% from a year earlier.  U.S. supply numbers backed up the IEA’s concerns. Crude oil inventories unexpectedly rose by 3 million barrels last week—when analysts had expected a drop—largely because of higher imports. Gasoline demand was down 1.5% over the past month, and diesel use fell by the same amount. With all this in mind, several analysts now expect oil prices to keep falling toward the $50–$60 range in the next few months. If the oversupply hits as forecast, WTI could dip below $60 in early 2026.

Here in the Chicago spot market, prices moved in step with crude oil and stayed steady. Supplies remain healthy. A fire at the Phillips 66 Wood River refinery temporarily halted gasoline production, but the shutdown should be short-lived. Even if it lasts longer, the end of summer driving season and strong inventories mean we’re unlikely to see big jumps in gasoline prices at the pump anytime soon.  In addition, I do not expect to see diesel retail prices move much at the pump in the coming week.

Propane prices are still weak, with summer fill prices at their lowest of the year. Inventories rose by 3.9 million barrels this week, but total stocks are still behind last year’s levels. With corn yields looking strong—pointing to a potentially active corn-drying season—and if colder weather arrives earlier than expected, propane prices could rise faster than average going into end of year. Now is a good time to fill your tank or lock in part of your winter supply to protect against possible price swings.

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

Best regards,

Jon Crawford

Prices Fell Like Rock In Water

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Good morning!

Happy Friday! WTI crude oil prices posted their sharpest weekly decline since late June, falling from almost $68 to $64 per barrel over the past five days. The sell-off was driven almost entirely by geopolitical and supply-side developments that shifted market sentiment firmly into bearish territory.  The primary catalyst was news of an imminent Trump–Putin meeting aimed at ending the war in Ukraine. Reports on Friday suggested that the U.S. may consider recognizing some Russian territorial gains as part of a peace framework. This perceived diplomatic progress reduced fears of near-term supply disruptions, prompting traders to unwind risk premiums.  At the same time, President Trump escalated his sanctions strategy, imposing an additional 25% tariff on Indian goods in response to its Russian crude purchases, and warning of 100% secondary tariffs on all countries continuing to buy Russian oil. While such measures may reshape global trade flows over time, in the short term a peace deal and tariffs reinforced expectations of stable to increasing supply of crude oil in the marketplace.  On the global production side, OPEC+ announced a further 547,000 barrels per day increase for September—its fourth consecutive monthly hike since April—fully reversing 2.2 million bpd of earlier voluntary cuts. Adding to the pressure, the IEA updated its forecast for 2025, projecting global oil supply growth of 2.1 million bpd, roughly triple the anticipated demand growth of 700,000 bpd. This widening supply–demand imbalance fueled further concerns of crude oil oversupply into year-end.

U.S. economic data compounded the downward pressure. The July jobs report delivered a significant miss, with only 73,000 jobs added versus expectations of 100,000–115,000. Previous months were revised sharply lower, and unemployment edged up to 4.2%. The soft labor data reinforced concerns about slowing fuel demand, outweighing the supportive impact of a larger-than-expected 3 million barrel draw in U.S. crude inventories. Refinery utilization remained strong at 96%, but economic jitters in the US dominated trading psychology.

Overall, geopolitical events, global supply issues, US economic data all supported lower crude oil prices, hence the sharp decline in crude oil price over the past five days.  Considering the dramatic decline, we will probably experience a floor in prices starting next week based on historical price movements.

The Chicago spot market tracked WTI’s decline, with gasoline and diesel prices easing from recent highs. Price movements over the past few days were modestly volatile but largely in line with Group spot trends, signaling balanced supply conditions. Retail prices for both fuels remain widely spread due to the speed of the wholesale price drop, but declines at the pump are expected in higher-priced markets.

Propane spot prices remained soft, supporting favorable summer fill retail prices. Although futures have yet to breach earlier-year lows, inventories are now below last year’s levels—a notable shift from just last month when stocks were above both last year’s figures and the five-year average. This slow but steady draw is helping to keep forward pricing in check. Given current conditions, topping off tanks now and locking in winter gallons is strongly recommended.

As always, 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

Friday Retreat

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Happy Friday!

Crude oil prices increased all week until Friday.  WTI crude oil price closed the week ending August 1, 2025 around $67/barrel.  Friday was a retreat from the week high of $70/barrel.  On Friday, the jobs report was not great showing less than 100k jobs added in July and previous months all revised lower.  In addition, the unemployment rate ticked up slightly.  The announcement sent markets and crude oil prices dramatically lower.

The primary geopolitical catalyst for market unease this week stemmed from President Trump’s decision to accelerate his diplomatic timeline for ending Russia’s war in Ukraine. On July 28, Trump dramatically shortened his previous 50-day ultimatum to just 10–12 days, threatening 100% secondary tariffs on nations purchasing Russian oil. These aggressive measures injected fresh fears of global supply disruptions, particularly among large Russian oil buyers such as India and China. India, which sources roughly 35% of its crude from Russia, was hit with a new 25% tariff on its goods starting August 1, a move explicitly tied to its Russian energy trade.  In addition, OPEC+ continued its phased supply restoration, and is expected to announce the continued 548,000 bpd increase for September.  If OPEC continues with the proposed increases, the group’s plan to fully unwind its 2.2 million bpd of voluntary cuts by September will be achieved. The continued unwinding is interpreted as an effort to reclaim market share and test the resilience of U.S. shale producers—many of whom are already facing rising cost pressures and falling rig counts.

While geopolitical escalation spurred bullish sentiment, that was partially offset by concrete developments on the trade front. Over the weekend of July 27–28, the United States and European Union reached a landmark trade agreement that reduced looming tariffs on EU goods from 30% to 15%. In return, the EU committed to purchase $750 billion in U.S. energy products over the coming years. The deal helped lift crude prices, affirming U.S. export prospects and stabilizing broader energy trade flows.  Still, market participants remained cautious due to tariff deadlines targeting other major economies. While Trump granted Mexico a 90-day extension on certain trade terms, tariffs on energy, automobiles, and metals remained in place. The opaque nature of trade policy evolution contributed to demand uncertainty, further amplifying volatility in oil pricing.  Federal Reserve policy also loomed over the oil complex. The Fed held interest rates steady at 4.25%–4.50% for a fifth straight meeting, citing inflation and economic uncertainty linked to global trade disruptions. Fed Chair Jerome Powell reiterated that rate cuts were on the table but gave no timetable, injecting uncertainty into energy demand forecasts.

From a supply standpoint, U.S. production offered a mixed picture. After hitting a record 13.49 million barrels per day in May, domestic output hit another record of over 13.5 million bpd in July. This was surprising given weaker drilling activity, with active oil rigs dropping to 415 in July — down significantly from 482 a year prior. Along with record production this week, U.S. crude inventories posted a substantial build of 7.7 million barrels for the week ending July 25, contradicting analyst expectations of a 1.3-million-barrel draw. The increase was largely attributed to soft export levels, despite healthy refinery activity.  Refiners operated at 95.5% capacity, the highest in recent months, processing nearly 17 million bpd. Gasoline inventories dropped by 2.7 million barrels, driven by strong summer driving demand, but distillate stocks rose by 3.6 million barrels—well above forecasts—reflecting slower-than-expected industrial draws.  The U.S. gasoline market reflected seasonal strength, with large inventory draws indicating robust summer driving activity. And the build in distillate stocks was much needed as the US tries to refine it’s way out of a 20%+  year-over-year deficit.

In local news, the Chicago Spot market traded in tandem with crude oil prices.  Gasoline prices increased dramatically, but with the sell-off on Friday, we could see stability settling going into the weekend.  Therefore, we might now see gasoline retail prices at the pump change too much.  Diesel prices also moved in tandem with gasoline, however not as dramatically.  Again, with the deep sell-off on Friday, I don’t expect to see diesel retail prices at the pump move too much.

Propane prices held steady this week.  We are definitely at the low for the year.  I highly recommend filling up your tank at these prices.  Winter economics will kick in on October 1st and propane inventories are starting to not build as expected.  In addition, exports continue to be very robust.  Therefore, I’m starting to see some headwinds for future propane prices.  I recommend locking in some gallons for the upcoming season to protect yourself from market volatility this winter.

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