Yearly Archives: 2025

First Gain In Weeks

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Crude oil prices are set to close with a weekly gain for the first time in several weeks. A combination of geopolitical tensions and economic developments contributed to the move higher. The week began with a fairly steep sell-off after OPEC officially announced over the weekend that it would ramp up production in June by 400,000 barrels per day—nearly double what was initially agreed upon. At this pace, OPEC could return to pre-cut production levels by the end of November 2025, a full year ahead of schedule.  However, after a day of digestion, the market stabilized when shale producers in the U.S. announced immediate production cuts. Unlike in the past—when cutting production in the Permian Basin led to economic strain—today’s higher drilling costs and lower crude prices are leading Permian producers to prioritize margin over volume. Many companies are now content to pump less if they can maintain profitability through the downturn.

Tensions in the Middle East also fueled bullish sentiment. Trump announced a ceasefire agreement with the Houthis in Yemen, but no vessels have yet moved through the Red Sea due to lingering distrust. Meanwhile, Israel continued bombing Gaza and confirmed plans to fully occupy the region. In a major geopolitical surprise, India responded to a May 25 terrorist attack from Pakistan by striking six Pakistani cities. Pakistan retaliated by shooting down Indian fighter jets with both drones and its own aircraft. The escalation caught global attention, especially as Pakistan used Chinese-made jets and India used French-made ones. The episode raised alarms over China’s growing advancements in military aviation.

Sanctions remained in place against Iran, Venezuela, and Russia. The UK issued new sanctions against a Russian oligarch operating a fleet of 100 shadow vessels transporting crude oil to China. While the U.S., UK, and EU continue to ramp up pressure, oil flows from these sanctioned nations have persisted.

Trade tensions took a more optimistic turn this week. The U.S. and UK finalized a deal on Thursday—though the impact is more symbolic since the U.S. already runs a trade surplus with the UK. The bigger negotiations are yet to come. Both the U.S. and China have announced a willingness to lower tariffs in an effort to reach a deal, with talks set to begin this weekend in Switzerland. The announcement followed news that China experienced its largest drop in exports to the U.S. in April. In response, China continues to roll out monetary easing policies to maintain positive economic growth. India also said it is open to reducing tariffs to secure a deal with the U.S. I believe we’ll see a flurry of trade agreements being completed in the months ahead.

The EIA reported a crude inventory draw this week, driven mostly by gasoline production from US refiners in preparation for summer demand. Diesel inventories remain below the five-year average, but refiners are showing new discipline. They’ve signaled a willingness to limit output in order to maintain profitability, rather than chasing market share by selling gasoline and diesel at low profitability or a loss. That discipline is helping to create price stability across the refined product spectrum.

In local markets, diesel prices bottomed out in the Chicago spot market earlier this week before rebounding quickly to close out the week. I expect to see retail diesel prices move higher next week as a result. Gasoline prices continue to hold steady. Demand for gasoline hasn’t surged yet, and the Chicago market remains well-supplied. Diesel inventory remains somewhat tight, but conditions are improving and not currently affecting prices.

Propane prices also appear to have bottomed this week. Futures pricing saw some upward momentum as expectations for strong propane exports from the U.S. increase into the second half of 2025 and throughout 2026. Midwest propane inventories remain below the 10-year average, and we’ll need to build storage through the end of September to stay on track. If crude oil prices remain in the $60/barrel range, we should be able to close the gap and reach the five-year average by fall. I strongly recommend topping off your tank by the end of August and locking in propane contracts for the upcoming heating season. We’ll be releasing next year’s contract prices within the next two weeks—stay tuned.

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

Best regards,

Jon Crawford

Global Crude Oil Price War Brewing?

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Happy Friday!

This week brought a more tempered level of volatility in the crude oil markets compared to prior weeks, but there was still no shortage of impactful news. The biggest driver of crude oil prices continues to be the evolving trade relationship between the United States and China, along with economic data released from both countries.  China reported stronger-than-expected GDP growth for Q1 of 2025, showing a 5.4% year-over-year increase. On the surface, this appeared to be a bullish signal for oil demand, especially considering China’s status as one of the world’s largest crude importers. However, the story beneath the headline was less encouraging. Many analysts attributed the growth to a temporary “pre-tariff” export rush. Ongoing deflationary pressure, weak domestic consumption, and a shaky property sector still threaten China’s ability to sustain growth through the rest of the year.  In contrast, the U.S. economy contracted by 0.3% in Q1, marking the first quarterly decline since 2022. The contraction was largely driven by a surge in imports ahead of anticipated tariffs, combined with slowing consumer spending and government cutbacks. Although one quarter of negative GDP growth does not technically define a recession, many economists raised red flags. The IMF pegged the probability of a U.S. recession at 40%, and J.P. Morgan raised their call to 60%.

However, things shifted slightly on May 2 when China’s Ministry of Commerce publicly acknowledged that they are assessing proposals from the U.S. to reopen trade talks. This was the first recognition from China that negotiations might be on the table since the latest escalation in tariffs. According to officials, the U.S. has expressed interest in dialogue, and China is evaluating the sincerity of these efforts. But Beijing also made it clear: the U.S. must first remove unilateral tariff hikes before any formal talks can begin. The statement was seen as an olive branch, but it came with conditions. While the path forward is uncertain, this is the most constructive tone we’ve heard in weeks.

In terms of supply-side news, crude oil prices were under pressure this week due to a 3.76 million barrel build in U.S. crude inventories. OPEC+ signaled that they may move to increase production again in June. Saudi Arabia specifically indicated that they are comfortable with lower prices and may support a faster pace of output increases. That comment caused a quick drop in oil prices as some traders began to price in the possibility of a price war. OPEC+ will meet next week, so we should have more clarity then.  Then, in a surprise geopolitical turn, President Trump announced on May 1 that secondary sanctions would be applied to any country or company purchasing Iranian crude or petrochemical products. The threat sent crude oil prices sharply higher mid-week. The market’s concern is that this could disrupt a significant portion of Iranian crude going to China, which remains Iran’s top customer. Traders reacted quickly, and the spike reminded everyone how sensitive the energy markets remain to any shifts in foreign policy or geopolitical risk.

In local markets, the CME spot market moved slightly lower along with crude oil. Gasoline and diesel supplies remain tight across much of the Midwest. Although refinery maintenance is starting to wind down, the supply chain is still trying to rebalance. I don’t expect much movement at the pump next week. If anything, we could see a small drop in retail prices as supply stabilizes.

Propane prices in the spot market also moved a bit lower this week. However, the forward curve has remained steady. Midwest inventories are still running below the five-year average, and if U.S. oil companies slow drilling to defend price, propane price could begin to decouple from crude oil. On top of that, lower inventories in the Midwest could increase our dependence on Canadian imports. And with trade tensions still brewing, the threat of tariffs on Canadian propane remains real. If tariffs are imposed, we could see a major price increase later this year. Right now, the current retail price of propane holds good value. Although we could see a small dip, I don’t expect a dramatic drop unless WTI crude drops below $55/barrel. Heating contracts for next season will be available soon. I recommend topping off your tank in the next few months and locking in some propane fixed-price gallons for next winter, especially with ongoing uncertainty around trade with Canada.

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

Lots Of Activity, Not A Lot Of Movement

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Happy Friday!

Crude oil markets remained volatile this week, although not as chaotic as in recent weeks. Price swings were narrower, with much of the movement driven by ongoing geopolitical tensions, evolving trade policies, and global supply considerations.  The biggest theme in the market continues to be the uncertain trade relationship between the United States and China. Oil prices trended lower for most of the week as investors reacted to conflicting reports about trade negotiations. On Thursday, President Trump stated that the U.S. is in ongoing talks with China—despite earlier denials from Beijing. Later in the week, reports surfaced that China may ease tariffs on certain U.S. imports, signaling a potential shift in tone and an effort to de-escalate tensions. Additionally, there were discussions in Washington around possibly reducing the current tariff rate on China from 125% to around 50%. Any softening of tariffs could lift crude oil demand if global trade begins to pick back up.

The war in Ukraine also took a few turns this week. There were renewed discussions around a ceasefire proposal led by the United States. Under the proposed deal, Ukraine would retain a military defense capability while allowing Russia to keep the territories it gained, including Crimea. Neither side has agreed to the terms. In response to stalled negotiations, Russia launched its largest attack on Kyiv since the beginning of the war—potentially an attempt to apply pressure and accelerate peace talks. If a ceasefire were to be reached, Russian crude oil exports would likely increase, putting further downward pressure on global oil prices.

OPEC+ continues to deal with internal tension. Several members are expected to advocate for accelerating production increases for the second month in a row. Kazakhstan, a key OPEC+ member, announced this week that it will prioritize domestic needs and will not cut output at its major oil fields. This stance undermines the group’s ability to maintain unified production cuts. If more countries begin increasing supply, the global market could easily swing into surplus, further weighing on prices.

There was also some progress reported between the U.S. and Iran on a nuclear deal. Despite new U.S. sanctions on a prominent figure tied to Iranian oil exports, broader trade talks are showing signs of improvement. Some traders are beginning to speculate that U.S. sanctions on Iranian crude could be lifted altogether. However, many believe Iranian oil has continued to flow under the radar, so any official easing of sanctions may not significantly alter global supply.

On the domestic front, crude oil inventories in the U.S. saw a modest build of 200k barrels this week, while gasoline stocks rose by 4.5 million barrels as refiners ramped up production ahead of peak summer driving demand. If gasoline demand does not meet expectations, the growing inventories could push pump prices lower. Meanwhile, distillate stocks fell by 2.4 million barrels. Distillate inventories remain below the five-year average, but demand has been soft, and refiners are currently focused on gasoline production due to seasonal maintenance. Refinery utilization remains below 90%, which is quite low for this time of year. At this point, I believe crude oil prices will likely stay in a $60–$65 per barrel trading range until there is a major shift in data or policy.

In local news, the Chicago spot market continues to trade steadily. Although we’ve seen a few isolated terminal outages due to refinery maintenance, pricing has remained under control. I don’t expect to see any major changes to retail gasoline or diesel prices next week.

Propane prices continue to hold firm. We may not see much of a drop from current prices for summer fills, but we’ll keep a close eye on the market as we move into May. We’re expecting to release next season’s heating contracts by the end of May. At that time, I’d recommend topping off your tank and considering a contract for at least part of your winter usage.

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

Best regards,

Jon Crawford

Another week… Another tariff

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Good morning!

Happy Friday!  This past week was yet another roller coaster for global crude oil markets. Prices started off under pressure but managed to rebound by the end of the week. Geopolitical headlines, economic data, and trade developments all collided to create a very complex and unpredictable trading environment.  The biggest driver of crude oil volatility continues to be the escalating trade conflict between the United States and China. The ongoing uncertainty is weighing heavily on global markets, and it’s directly influencing crude prices. President Trump’s latest round of sweeping tariffs triggered immediate market reactions. While oil, gas, and refined products were excluded from the tariffs, the broader implications—especially for inflation and economic growth—caused concern. On April 15, Trump announced he was considering adjustments to the existing 25% tariffs on imported vehicles and auto parts from Canada, Mexico, and other regions, which gave crude prices a little lift. But the inconsistency in trade strategy has many traders on edge. OPEC even revised its global oil demand forecast lower for the first time since December. Fed Chair Jerome Powell didn’t help matters, stating that the latest round of tariffs is “larger than anticipated,” and warning of significant economic consequences.

China didn’t hold back either. On April 11, they responded with a retaliatory 34% tax on American imports, further confirming fears of a full-blown global trade war. That move initially deepened the selloff in oil markets, as traders priced in the possibility of decreased demand from the world’s largest crude importer. On top of that, recession warnings are starting to ramp up. Goldman Sachs now sees a 45% chance of a U.S. recession within the next year and has revised its oil price outlook lower. JPMorgan has gone even further, projecting a 60% chance of a recession both in the U.S. and globally.  Meanwhile, OPEC+ stirred the pot with its announcement that they will be increasing production much faster than anticipated. The group plans to bring an additional 411,000 barrels per day to market in May—well above the original schedule of 135,000 bpd. The decision comes at a time when sentiment is already shaky, and it’s adding even more downward pressure to prices. OPEC+ ministers also met over the weekend to stress the importance of sticking to quotas, and they’ve asked overproducing members to submit correction plans by April 15.

Major banks responded to all this by cutting their crude oil price forecasts. HSBC dropped their 2025 Brent forecast from $73 to $68.50 per barrel and 2026 from $70 to $65. They also lowered demand growth expectations for 2025 to 0.7 million barrels per day. Goldman Sachs now expects Brent to average $66 in 2025 and $58 in 2026. BofA came in with $65 and $70 for those years, and JPMorgan echoed the downward revisions.  The EIA also updated its outlook, now seeing Brent crude at $68 for 2025 and $61 for 2026—down $6 and $7 per barrel from prior projections. That outlook came alongside the latest inventory data, which showed crude oil inventories in the U.S. sitting 6% below the five-year average. Gasoline inventories are 1% below average, while distillates are 11% below. The drop in supply is tied to a continued decrease in active rigs. The Permian Basin had its worst one-week rig drop since 2023, and overall U.S. rig counts are now at the lowest since 2022. Refinery utilization has also dipped below 85%, mostly due to widespread maintenance.

There was some positive news late in the week. Chinese crude oil imports for March were up nearly 5% year-over-year, with Iranian shipments jumping ahead of possible tighter sanctions. That data helped put a bit of a floor under crude prices. Meanwhile, oil producer Maurel & Prom reported production of over 30,000 barrels per day in Q1 2025—a 5% increase from Q4 2024—with an average sale price of $74.90 per barrel. So there are still some signs of profitability in the industry.  After all the turbulence, WTI crude prices climbed from $61.53 on April 13 to $64.68 by April 17—a 5.1% gain in just five days. On April 17 alone, prices rose over 3.5%. That kind of move shows that while markets may have overreacted early in the week, the floor is still holding. Still, volatility remains the name of the game, and with so many moving parts—tariffs, OPEC+, inflation, and recession fears—there’s no clear direction in sight.

Locally, the Chicago Mercantile Exchange traded fairly in line with the NYMEX. Even though one of the major refineries is still in turnaround, prices didn’t blow out. Products remain tight in Wisconsin, but with demand a bit lower, the spot market didn’t overreact. I don’t expect any big changes at the pump in the coming week.

Propane inventories had a surprise draw this week according to the EIA report. Inventory levels are now lower than this time last year and below the five-year average. Spot and futures prices jumped quickly off last week’s lows. It’s a little hard to say how far summer fill prices will fall in this environment. Contract pricing for next heating season is currently looking about the same as last year. As always, we recommend topping off your tank this summer and locking in a portion of your propane needs early for the upcoming winter.

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

Best regards,

Jon Crawford

AND… IT’S WORSE THAN BEFORE…

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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

No One Knows

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Good morning!

Happy Friday! This past week has been absolutely chaotic. My update may seem a bit scattered, but that reflects the unpredictable nature of the crude oil market over the past several days. Market movements have been erratic, with every news headline sending commodities in different directions. A story that was bullish on Monday and Tuesday suddenly became bearish by Wednesday and Thursday. I have never seen such a rapid flip-flop in trading sentiment within a single week.

At the start of the week, reports indicated that Russian oil exports were declining, only for new reports days later to suggest that Russian crude was finding stable markets. Tariffs have been a constant point of discussion, with new trade policies emerging almost daily. Inflation rose in January, leading the Federal Reserve to maintain its pause on interest rate cuts, yet crude oil prices climbed despite a strong dollar, which traditionally has the opposite effect. Meanwhile, Ukraine and Russia are reportedly seeking a peace agreement, which initially caused crude prices to drop due to the expectation of increased Russian oil exports—though Russian crude is already flowing into the market.

India announced plans to ramp up purchases of crude oil from Iran and Russia, but at the same time, Trump has pulled back on some Iranian sanctions while simultaneously threatening additional sanctions on Russia. Chinese demand continues to decline, yet the International Energy Agency (IEA) reported that global demand is on the rise. Kazakhstan, Nigeria, and other oil-producing nations are increasing their crude oil output, while OPEC+ still sits on 6-8 million barrels per day of spare capacity. On the geopolitical front, Trump has proposed increasing arms sales to the EU and Israel. Meanwhile, Israel has set a Saturday deadline for the release of hostages, while Trump continues discussing a potential occupation and reconstruction of Gaza—a proposal firmly opposed by Egypt and Jordan.

At the end of all this turmoil, one thing is clear: no one knows exactly what is going on. WTI crude oil finished last week at $71 per barrel, and as of mid-day today, it looks to be closing at about the same level. Despite the extreme volatility throughout the week, the markets have ultimately settled where they started. Market reactions have been entirely unpredictable, with prices swinging wildly between bullish and bearish signals, only for the original signals to be reinterpreted in the opposite direction later. This pattern suggests that the markets are currently irrational and inefficient. Given this uncertainty, I am staying out of the market for now. If I had to make a prediction, I would expect WTI crude prices to dip below $70 per barrel in the coming months, possibly even reaching the low $60s before the end of the year. However, as this past week has demonstrated, market behavior is impossible to forecast with certainty.

In local news, gasoline and diesel prices experienced volatility throughout the week but stabilized heading into the weekend. A major refinery turnaround in the Midwest market is scheduled for April is expected to impact gasoline supply. While I believe there is enough refining capacity to meet demand, there is a possibility of rising gasoline prices during that period. As we enter refinery maintenance season in Chicago, we can expect increased volatility in the spot market. Diesel supply could also be affected as we approach harvest season, depending on the timing of the harvest. However, I do believe there will be sufficient supply, with any shortages likely to be temporary and driven by competition for available spot market barrels. For now, I expect Chicago spot prices to remain stable until mid-to-late March.

Propane prices continue to hold steady, although distribution at the terminal level remains challenging. Many pipeline terminals are experiencing significant delays, making it more difficult for retailers to access propane. In addition, another snowstorm is expected today, followed by a cold snap next week. There is no cause for panic—we will navigate the next seven days, but we do ask for patience as we manage deliveries based on consumer inventory levels. As a reminder, if you are expecting a delivery soon, please clear your driveway of snow and ice following this weekend’s storm. Given the volume of deliveries scheduled for next week, we cannot guarantee service to locations where driveways are not accessible. Our priority is to ensure that everyone who needs a delivery receives one safely and efficiently.

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

Best regards,

Jon Crawford

Tariffs Came and Went

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Good afternoon!

After an absolutely chaotic and tense week in the markets, crude oil prices are on track to close lower for the third consecutive week. Monday was particularly volatile, with Canada and Mexico announcing retaliatory tariffs on the United States after Trump imposed a 25% tariff on Canadian and Mexican goods, along with a 10% tariff on crude oil imports. Additionally, Trump proposed levies on American companies purchasing crude oil from Canada. The crude oil market surged in response, triggering widespread panic. The Dow and S&P tumbled, Bitcoin collapsed, agricultural commodities declined, and crude oil prices soared. By 3 p.m. Monday, both Mexico and Canada agreed to pause their tariff plans, and the United States followed suit. As part of the negotiations, Canada committed to deploying 1,000 troops to its northern border to assist with security, while Mexico agreed to send 10,000 troops to aid in southern border protection. At one point, crude oil prices nearly turned negative due to the sudden market shift.

On Tuesday, it became evident that tariffs are going to be a key negotiation tool and that patience is essential during these discussions. Trump also urged American companies and Saudi Arabia to increase oil production in response to newly announced sanctions on Iran. He directed the State Department to reduce Iranian crude exports to zero. While this initially caused a spike in crude oil prices, the reaction was tempered when it became clear that the sanctions were being implemented gradually, leaving room for negotiation. Saudi Arabia has expressed a willingness to support the effort to squeeze Iran’s exports but is seeking concessions from the United States in return, including further civilian nuclear development and commitments for U.S. defense sales and protection. Meanwhile, China reported more disappointing economic data, further pressuring crude oil prices. Economists do not anticipate China emerging from recession until at least the end of this year, with most predicting a recovery may not occur until 2026. A critical factor to watch is how pressure on Iran and Russia affects OPEC+ production. If Saudi Arabia increases output more than expected, the UAE and Iraq may break quota agreements, potentially triggering a significant market shift. Despite sanctions and tariffs, crude oil fundamentals remain bearish. In the U.S., the Energy Information Administration (EIA) continues to report strong crude oil and refined product inventories. At this point, the best approach is to take a step back, remain patient, and see how developments unfold in the coming months.

In local news, Chicago spot prices largely mirrored crude oil movements. Diesel prices surged on Monday but have since stabilized to the downside. I do not anticipate a significant increase in retail prices at the pump. Gasoline prices also retraced their earlier gains, so I expect retail pump prices on gasoline to remain steady in the coming week. Not much change to the pocket book at the pump which is nice!

Propane prices have somewhat decoupled from crude oil trends. Even as crude oil prices declined, propane prices remained elevated throughout the week. The EIA reported another substantial drawdown in national propane inventories. While supplies remain in good shape, forecasts for colder-than-normal temperatures through the rest of February and possibly into March are contributing to volatility. I expect propane prices to hold steady this month and potentially decline in March. However, if the anticipated cold snap does not materialize, we may see propane prices start to soften by the end of February. With a possible major snowstorm predicted for this weekend in Wisconsin, I would like to offer a quick reminder to ensure driveways are clear of snow and ice and that there is an accessible path to your propane tank. We want to make sure deliveries can be made safely and efficiently. We appreciate your cooperation in advance!

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

Anticipating Canadian Tariffs

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Good morning,

Happy Friday! Crude oil prices are on track to close their second consecutive week with a loss. Inflation remains a concern in the U.S., prompting the Federal Reserve to maintain its pause on interest rate cuts. Surveys from major banks now indicate a 25% chance of a potential rate increase. This decision has kept the dollar firm, helping stabilize crude oil prices.

The continued price decline this week is largely driven by concerns over weakening demand in China and the impact of Trump’s proposed tariffs on the global economy. Additionally, Trump has reiterated his commitment to keeping crude oil prices low by any means necessary. However, crude oil prices leveled off toward the end of the week as bullish data entered the market. Kazakhstan announced that OPEC should remain united and resist engaging in a price war for market share. A price war could drive crude oil prices down significantly, creating a scenario where no country benefits. If energy companies start losing money on crude oil production, they may attempt to recover losses by increasing the price of gasoline and diesel. If these fuel prices rise globally, the risk of a recession increases, which could further reduce crude oil demand and force companies to raise finished product prices even higher. In short, a supply war for crude oil market share could create turmoil in the global economy.

In other news, Ukraine continues to target Russian refineries, raising concerns about potential export disruptions. Meanwhile, Trump is considering imposing tariffs on Canadian crude oil imports. If enacted, these tariffs could increase Midwest refining costs by 25%, likely leading to higher gasoline and diesel prices. Trump is also weighing the possibility of placing a 25% tariff on Mexican crude oil, revoking Chevron’s license to operate in Venezuela, and imposing sanctions on Venezuelan crude oil. These actions would have a significant impact on Gulf Coast refineries, which rely on imported heavy crude. The shale oil produced in the Permian Basin does not meet refining specifications for these facilities, just as Bakken crude oil is not compatible with Chicago-area refineries that serve the Midwest. If these tariffs and sanctions move forward, refiners east of the Rockies may struggle to secure the appropriate crude oil imports to maintain production levels. As a result, gasoline and diesel prices could rise. For now, the industry is in a holding pattern, awaiting Trump’s final decision expected tomorrow.

In local news, gasoline prices increased slightly as refiners prepare for potential tariffs during the upcoming peak demand season in spring and summer. However, I do not anticipate significant price fluctuations at the retail level, as margins have remained strong amid ongoing volatility and market uncertainty. Diesel inventories have declined, yet diesel prices have dropped over the past week due to tariff concerns. While tariffs could increase costs, many traders expect that higher prices will reduce demand. A slight decline in diesel retail prices is possible, but any movement is likely to be minimal.

Propane prices continue to trend lower as supply disruptions east of the Rockies improve. The extreme winter weather, which drove demand spikes as far south as New Orleans, had caused spot price basis to rise dramatically. However, with basis levels shrinking, I expect retail propane prices to decrease in the coming week. As always, please ensure your driveway is free of snow and ice and that there is a clear path to your propane tank. This will help our drivers make safe and efficient deliveries when you need a refill.

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

Best regards,

Jon Crawford

The Trump Effect

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Good morning!

Happy Friday! The big news this week was the inauguration of the 47th President, Donald Trump. Wasting no time, President Trump began implementing his agenda, which includes expanding access to American fossil fuels. Following the inauguration, WTI crude oil prices dipped below $75 per barrel for the first time in several weeks. Many traders sold on the news, influenced by indications that Trump may impose fewer tariffs on China and other countries than initially expected. His stated approach is to limit tariffs wherever possible while keeping the option to increase them if necessary. Trump also called on OPEC+ to increase production, though the request seemed to fall on deaf ears. Geopolitical developments added to the mix, with the Houthi rebels announcing they would cease attacks on ships in the Red Sea and Iran stating they will no longer pursue nuclear weapons. Additionally, China expressed a willingness to negotiate with the Trump administration. Trump has also prioritized refilling the U.S. Strategic Petroleum Reserves and increasing petroleum product exports. Overall, the tone in the crude oil market is leaning bearish. Chinese demand remains weak, and while NATO and Trump disagree on the best approach to ending the war in Ukraine, there is an increasing sense of urgency to bring Putin to the negotiating table. However, negotiations with both China and Russia are expected to be more challenging this term, as their economies have become more interconnected under the pressure of global sanctions on Russia. For now, crude oil prices are stabilizing and have shifted into a “wait-and-see” mode.

The Chicago spot market mirrored the dip in crude oil prices this week. As a result, I expect retail prices of gasoline and diesel at the pump to decrease slightly. However, with lingering uncertainty in the market, any decreases may happen gradually.

Propane prices saw a spike during the recent cold snap due to increased index prices from suppliers. Thankfully, supply distribution is beginning to improve across the East of the Rockies. I anticipate propane prices could ease in February as January contracts expire, distribution issues improve, and temperatures return to normal winter levels. As always, we kindly ask that you keep your driveway clear of ice and snow and ensure there is an accessible path to your propane tank. This helps our drivers make safe and efficient deliveries.

If you have any questions, comments, or concerns, please don’t hesitate to give us a call. Have a great weekend!

Best regards,

Jon Crawford

Juuuuuuussssst A Bit Outside

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Happy Friday!

Today I felt like paying respect to the loss of “Mr. Baseball”, Bob Uecker this week. Ueck was a pillar of Wisconsin his entire life of 90 years. Wisconsin and baseball in general will never be the same. Thank you “Mr. Baseball” for amazing memories my entire life. His famous line, “juuuuuusssst a bit outside” fits in perfectly with the crude oil trade this week. WTI crude oil prices continued their frothy run higher and look to close the week on a continued four-week gain. WTI broke through the psychological ceiling of $80/barrel for a brief moment. But the rally above $80/barrel seems to be “juuuuusssst a bit outside.” Although sanctions on Iran and Russia look to tighten, the amount of crude oil trading in the market is still long. China announced that their yearly GDP of 5% was right in line for 2024. I do not believe any economic data that comes out of China. A survey released this week announced that most citizens in China feel worse off today than two years ago. China also decreased refining of diesel fuel in 2024. The decrease is a strong signal of recession. China continues to announce large economic stimulus into renewable energies. The plan is that if the cost of energy continues to decline, the low cost will spur economic development. Under the upcoming Trump administration, there is a reluctance to allow China to do business in America, as well as strict guidelines for US companies doing business in China. For example, TikTok looks to be shutdown this Sunday. Trump is taking security measures against China very seriously. In summary, I do not believe that China is firing on all cylinders. Therefore the decline in Russian crude oil purchases due to sanctions from the US is sort of irrelevant.

Israel and Hamas announced a ceasefire deal this week along with some prisoner swaps. Yemen piggybacked on the deal and stopped attacking ships in the Red Sea. Geopolitical events seem to be taking a break as Trump takes office on Jan 20th. My belief is that the “Trump trade” is in a bit of caution. Traders and big banks alike are taking a pause and biting their nails as announced policies from Trump on day one are jumping all over the place. Next week is going to be very interesting to say the least. I honestly have no prediction on commodities for next week. I do believe that most trades will move on emotions rather than economics. Again, I would like to reiterate that I believe the world will move to “surplus crude oil” in 2025.

In local news, Chicago spot basis continued to jump all around this week. In good news, spot basis in Chicago compared to Group spot basis has balanced out. Diesel in Chicago spot is over 30 cents/gallon cheaper than the NYMEX Heating Oil Contract. Therefore, that means Chicago is very long on diesel. However, that did not stop diesel prices from rallying much higher along with the price of crude oil this week. Gasoline prices also followed diesel prices higher this week in Chicago. Unfortunately, I do expect to see retail prices of gasoline and diesel at the pump move higher next week. Our area is expected to have extreme cold next week. In my opinion, if you are running diesel trucks over the road, a winter-blended diesel with some #1 oil will be needed. Monday will truly be a test to see which companies and gas stations blended their diesel properly over the past week.

Propane prices have soared higher. The extreme cold across most of the East of Rockies has caused a bit of supply disruptions. There is not any shortage of propane. There are just distribution issues on pipelines and railroads. The spike in price should be short lived once the colder than average temperatures leave the area. I expect to see these higher prices through mid-February. Again, please make sure to keep your driveway free of snow and ice, and have a clear path to your propane tank. Also, if you are a will-call customer, please keep an eye on your tank over the coming seven days. We want to try and ensure that everyone stays safe and warm next week.

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