Happy Friday!
This week’s crude oil trade was largely influenced by geopolitical news, although the trading itself was relatively uneventful. Crude oil prices fluctuated within a narrow range, with WTI briefly dipping below $70 per barrel before recovering to end the week at a fairly flat level. Despite continued disappointing economic data and stimulus efforts from China, both the IEA and OPEC have issued projections for increased oil demand in China, creating a mix of perspectives on China’s future economic health. Headlines continue to lean bullish for crude oil demand, even as some traders predict a slower year in 2025. Global geopolitical tensions have provided price support and established a solid price floor for crude oil.
Among this week’s key developments, there was an attempted attack on Israeli Prime Minister Netanyahu’s home, prompting Israel to intensify its strikes in Lebanon and Gaza. Israel is now considering more aggressive actions against Iran in response. Additionally, reports emerged indicating that Russia has supported Houthi attacks in the Red Sea, and North Korean troops have reportedly entered Russia, with many speculating that they may join the fighting in Ukraine. If North Korean forces are drawn into the Ukraine conflict, this would represent one of the highest levels of escalation since the war began. Meanwhile, domestic inventories of crude oil and refined products have remained stable, even with peak harvest season underway. Overall, crude oil prices traded within a narrow band this week and are likely to end the week relatively unchanged.
In the Chicago market, the diesel spot basis has realigned with the Group market, providing some price relief for diesel despite strong demand from the harvest season. Gasoline spot prices also maintained their lower differential compared to the Group. I anticipate that diesel retail prices may dip slightly, while gasoline retail prices should remain steady.
Propane inventories saw a decline last week as crop drying demand ramped up. However, propane prices have held steady overall. If you haven’t yet secured a propane contract for the winter, I recommend contracting at least a portion of your expected usage. For those without contracts, it’s a good time to consider filling your tank.
As always, if you have any questions, comments, or concerns, please don’t hesitate to reach out. Have a great weekend!
Best regards,
Jon Crawford