Monthly Archives: December 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