Tariffs Came and Went

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

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

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

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

Psychological Trading or True Fundamentals?

Good afternoon,

Prices of crude oil surged today, with WTI breaking through the psychological ceiling of $75 per barrel. Since the start of the year, options on crude have shifted from predominantly short positions to long ones. Interestingly, market fundamentals remain largely unchanged since the beginning of the year. This rapid shift in trading sentiment raises the possibility of a quick profit-taking rally followed by a subsequent price correction.

The recent momentum in crude oil prices is being fueled by geopolitical factors and speculative activity. The Biden administration has imposed the toughest sanctions yet on Russian oil flows, with Trump signaling support for these sanctions and potentially even tougher measures. However, the reported drop in Russian exports last month was due to infrastructure issues, not demand shortages. Russian crude oil will likely continue reaching markets, particularly in China and India, as it has for the past two years. Despite trader optimism, China’s economic data remains weak. Efforts to stimulate the housing market are faltering as consumer demand for housing remains low. Reports suggest China’s GDP growth may be closer to 2.5% rather than the officially stated 5%. This indicates that crude oil demand from China may not increase as traders are hoping.

Trump’s threats of a 25% tariff on Canadian commodities, including oil, could cause gasoline, diesel, and propane prices to spike for about one-third of the U.S. market. However, Canada’s ability to sell these products overseas makes such tariffs unlikely. It’s more probable that this issue will be resolved diplomatically. Trump has also proposed unprecedented sanctions on Venezuela and Iran, with plans to request Saudi Arabia to fill any gaps in supply. This could create tensions within OPEC+, as UAE and Iraq are poised to increase production. If Saudi Arabia moves to pump more oil, it may encourage other OPEC+ members to do the same, potentially offsetting any supply concerns.

From a broader perspective, this appears to be a psychological bull run. I believe those who exercise patience will benefit, as market fundamentals do not currently justify a sustained upward trajectory. If energy costs were to rise significantly, it could lead to political backlash and further complicate the situation.

In our local Chicago spot market, the spot basis has dropped slightly, but the rise in crude oil prices has pushed costs higher overall. After today’s rally, I expect pump prices to remain stable in the coming week. With potentially extreme cold weather in the forecast at any moment during a Wisconsin winter, ensure your diesel fuel is properly treated to handle Wisconsin’s unpredictable winter conditions.

Propane cost rose this week, prompting an increase in retail prices. While the market has stabilized for now, we will monitor developments closely and hope to avoid additional retail price increases next week. As a reminder, please ensure your driveway is clear of snow and ice and that there is a safe path to your propane tank. This allows us to make deliveries safely and efficiently.

As always, if you have any questions, please don’t hesitate to reach out.

Have a great weekend!

Best regards,

Jon Crawford

First Gain Since November

Good morning,

Happy Friday!

I hope everyone made it through this week’s cold snap. It was certainly a reminder of winter’s arrival!

WTI crude oil pushed past the $70 per barrel mark this week and is poised to close above $70 for the first time since late November. The market saw a gain in crude prices this week, driven by a mix of shifting forecasts and geopolitical developments. The IEA surprised many by reversing its stance, now projecting increased crude oil demand in 2025. Canada is optimistic about rising U.S. consumption, anticipating that falling interest rates will boost manufacturing activity. The Biden administration imposed additional sanctions on Iran to further limit its crude exports. China increased crude imports for the first time in seven months, driven by expectations of monetary easing. However, some speculate this could simply be stockpiling at current lower prices. Interestingly, OPEC has adjusted its outlook downward, now predicting lower crude consumption after months of forecasting demand growth. Energy agencies and producers are presenting mixed projections, reflecting uncertainty across the board.

On the geopolitical front, the Trump administration is considering strikes on Iran’s nuclear facilities if negotiations fail. Meanwhile, global refining capacity is expanding, with the world’s largest refinery opening in Nigeria this week. This facility, which is 33% larger than the largest refinery in America and designed for direct exports, adds competitive pressure on OPEC.

In the U.S., inflation edged slightly higher in November, further solidifying expectations of a Federal Reserve rate cut at the next meeting. Trump’s cabinet picks and proposed policies could drive greater demand for gasoline and diesel. In addition, the EIA reported a draw in crude inventories but significant builds in gasoline and diesel stocks this week. The data in the US is predicting a lower dollar with stronger demand giving cause to higher crude oil prices.

Despite these developments, I remain bearish on crude oil heading into Q1 2025. The lowest prices of the year may occur early next year, although I anticipate a rebound in crude oil prices later in the year.

The Chicago spot market is well-supplied and has returned to a balanced state, with basis levels between the Chicago and Group markets now similar. While the rising price of crude oil has nudged up gasoline and diesel costs, I expect only modest increases at the pump. Prices should remain relatively low during the holiday travel season. For diesel customers, please ensure your supplier is properly blending diesel fuel for winter conditions. For stored diesel, blending with #1 ULSD is strongly advised to avoid issues during prolonged cold spells. For diesel purchased at gas stations, confirm the blending strategy in use to ensure reliable operation, especially as temperatures dip below zero in January.

Propane costs edged slightly higher this week but remain within a narrow trading range as winter adds seasonal volatility to pricing. There are currently no supply issues expected to cause significant price increases. As a reminder, please ensure driveways are clear of snow and ice, and there is an accessible path to your propane tank to allow for safe and efficient deliveries. In cases of heavy snowfall, we may be unable to complete deliveries if access is obstructed. We appreciate your cooperation and are happy to communicate if any challenges arise!

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

Meeting Expectations

Good morning,

Happy Friday! This week’s crude oil and refined products market updates were relatively uneventful. WTI crude oil failed to break through the $70 per barrel mark, as bearish sentiment continues to dominate. The volume of traders shorting crude oil futures for 2025 is on the rise, reflecting widespread skepticism about a near-term price recovery. China’s economy remains stagnant, with crude oil inventories already near capacity. While the U.S. economy remains strong, U.S. crude oil production is also highly robust, adding to downward pressure on prices. OPEC+ announced that current production cuts will remain in place through Q1 of 2025, with a gradual unwinding of cuts extended into 2026. However, since this move was already priced into the market, crude oil prices actually dipped following the announcement. On the geopolitical front, Israel and Lebanon have been relatively quiet, and news from the Russia-Ukraine conflict was limited. In light of these factors, I remain short on crude oil going into 2025. A move toward surplus inventories seems likely, with a high probability of WTI crude falling below $65 per barrel. That said, I do not expect these lows to hold for the entire year. A rebound to the $70–$75 per barrel range by mid-to-late 2025 seems plausible.

In local news, inventories of gasoline and diesel are plentiful, and prices continue to trend downward. I anticipate these lower pump prices will persist through the busy holiday travel season. For diesel consumers, I want to remind you of the importance of ensuring your supplier is treating diesel with the correct additives. Additionally, I strongly recommend blending #2 diesel with #1 diesel, as sudden cold snaps can occur, and blending helps ensure vehicles start and remain operational during harsh winter conditions.

Propane prices remain steady despite ample supplies, as demand has picked up with colder temperatures in early December. Traders are cautious about allowing propane prices to fall further at this time. As a friendly reminder, snow and ice can create challenges for propane deliveries. Please ensure that driveways are clear and there is an accessible path to your propane tank. This will help us deliver your propane safely and efficiently. Thank you for your cooperation!

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

Black Friday Clouds On The Horizon

Good afternoon,

Happy Friday! I hope everyone had a wonderful Thanksgiving! One notable perk of this year’s holiday was the drop in fuel prices at the pump. As we approach the end of the year, the outlook suggests that lower fuel prices may persist for a while longer. Crude oil prices closed firmly below $68 per barrel heading into the Thanksgiving weekend, reinforcing a bearish sentiment in the market. Crude oil inventories worldwide are expected to move into surplus in 2025, driven by stagnant demand growth in China and other regions. Chinese GDP growth remains flat, with stimulus measures viewed as short-term fixes rather than pathways to sustained recovery. Chinese crude imports and refinery runs are both decreasing, reflecting a sluggish economic environment.

Further downward pressure came from President Trump’s announcement of new tariffs: a 25% tariff on all goods from Mexico and Canada and an additional 10% tariff on goods from China. These tariffs strengthened the U.S. dollar, which in turn pushed crude oil prices lower. However, many analysts believe Trump’s move is a negotiation tactic aimed at bringing other countries to the table. Tariffs on Canadian crude oil imports could lead to significant price increases in parts of the U.S. due to the dependence of many refiners on Canadian crude, but negotiations are already underway with leaders from China, Mexico, and Canada. Meanwhile, OPEC+ delayed their production quota meeting from December 1 to December 5, with traders anticipating that current voluntary production cuts will remain in place. The U.S. continues to set records as the world’s largest oil producer, now exceeding 13 million barrels per day—a milestone no other country has reached. Even with significant spare capacity in OPEC+, American producers and other oil-exporting nations have pledged to maintain a price floor, likely around $60 per barrel.

On the geopolitical front, the ceasefire between Israel and Hezbollah in Lebanon has reduced tensions in the Middle East, though some violations have already been reported. Escalation between Russia and Ukraine remains the only significant bullish factor in the market, though the conflict appears to be losing momentum. Both Russia and Ukraine have expressed interest in negotiating peace under a Trump administration. Additionally, Trump’s proposed sanctions on Iran are set to go into effect on day one of his presidency. These sanctions could significantly reduce Iran’s export revenue and weaken financial support for groups like Hamas, Hezbollah, and the Houthis. Satellite technology is now effectively tracking Iran’s use of ghost ships and mid-ocean cargo transfers, further tightening enforcement.

Overall, the crude oil market is decidedly bearish, with a price floor likely around $60 per barrel. I expect WTI crude to trade between $65 and $75 per barrel in the long term. With global refining capacity steadily recovering, there appears to be no urgency to lock in futures prices at this time.

The BP Whiting refinery issue has largely been resolved, with the Chicago Spot Market realigning with the Group Spot. Both markets have moved to the January futures contract, and pricing has stabilized. I anticipate that these lower pump prices will continue through the holiday season. For those looking to lock in fuel prices for next year, January and February may provide the best opportunities.

Propane prices remain well-supported due to early cold weather and robust export demand. While crude oil prices have dropped below $70 per barrel, propane prices have ticked slightly higher. This firmness is driven by strong demand, signs of low natural gas inventories in Europe, and the potential for increased exports if China experiences a colder winter. Additionally, the proposed 25% tariff on Canadian propane, if implemented in February, could send spot market rail propane prices sharply higher. Customers who contracted propane for the winter are well-positioned. For those who have not yet contracted, I recommend filling tanks before Christmas week to avoid potential price volatility later in the season.

As always, if you have any questions, comments, or concerns, please feel free to reach out.

Best regards,

Jon Crawford

Over-Supply Jitters Running Wild

Good afternoon,

Happy Friday! This week, crude oil prices stabilized after the initial fizzle of the “Trump Trade.” Prices traded in a narrow range as the market digested a wave of economic data. WTI hovered near $70 per barrel, reflecting a delicate balance between bearish sentiment and potential geopolitical risks. China’s economic struggles continue to weigh heavily on crude prices. While Chinese home prices appear to be stabilizing, overall crude demand remains weak. GDP growth is stagnant, and stimulus packages are viewed as temporary fixes rather than drivers of sustainable economic growth. Chinese crude imports are flat, refinery runs are declining, and the world’s second-largest economy appears to be stuck in a holding pattern.

Meanwhile, the IEA, OPEC, and other financial institutions revised their outlooks for global crude oil inventories. Many now predict a surplus throughout all of 2025, extending earlier projections that anticipated surpluses only in the first half of the year. This shift is driven by weaker-than-expected Chinese demand and announcements of increased production from OPEC countries like Iraq and the UAE. Additionally, Mexico’s state-owned oil company received a government bailout to maintain its output, and the U.S. under the Trump administration is expected to accelerate leasing for Gulf oil production. With U.S. output already at 16 million barrels per day, the potential for a significant global glut is growing.

However, refining capacity could emerge as a counterbalance to rising crude inventories. Refineries around the globe are shutting down due to environmental regulations, economic pressures, or geopolitical issues. In the U.S., particularly California, refinery closures are accelerating due to strict environmental policies. China and Russia have also scaled back refinery operations, while Indonesia is adding new facilities. As a result, global refining capacity may move into deficit, which could support prices even in the face of higher crude inventories. Additionally, many American oil companies remain focused on disciplined production and shareholder returns rather than aggressive drilling campaigns. While “drill baby drill” may be a rallying cry under Trump’s pro-oil stance, U.S. producers are unlikely to flood the market in ways that significantly depress prices.

While geopolitical risks remain, many believe they are diminishing as Trump prepares to take office. Israel is continuing operations in Lebanon, but Iran has reached out to the U.S. to deny involvement in an alleged assassination plot against Trump. Trump’s expected tightening of sanctions on Iran could reduce Iranian oil exports, further tightening supply. Ukraine and Russia remain locked in conflict, but there are rumors that Trump is already negotiating a peace treaty ahead of his inauguration. Russian President Putin has even met with German Chancellor Scholz to discuss potential peace terms.

One wildcard is Trump’s proposed tariff strategy, including high tariffs on Chinese goods and smaller tariffs on imports from other nations. These measures could stoke inflation, potentially leading to a recession and lower refined product consumption. However, the Federal Reserve might lower interest rates to counter inflation, weakening the dollar and supporting higher crude prices. At present, bearish sentiment dominates the news cycle, but there are many moving parts as we approach the start of Trump’s presidency in 2025.

In the Chicago market, spot basis for gasoline has finally eased after refinery maintenance was completed, bringing healthier supplies back online. With harvest demand winding down, prices are starting to fall as we head into the holiday season. Gasoline and diesel prices at the pump are likely to remain stable. If crude oil prices hold steady through year-end, we can expect some price relief at the pump for holiday travel.

Propane prices remain stable but are edging slightly higher as winter demand begins. Despite high national inventories, increased export capacity is keeping the market balanced. Weather forecasts consistently predict an average to colder-than-average winter, which is notable given that recent winters have been warmer than normal. For now, no major surprises are expected going into the holiday season.

As always, if you have any questions, comments, or concerns, please feel free to reach out. Have a great weekend!

Best regards,

Jon Crawford

Unwinding the Trump Trade

Happy Friday!

This week’s big news was, of course, the U.S. Presidential Election, with Donald Trump emerging as the winner. Markets responded swiftly, pricing in what’s been termed the “Trump Trade.” Following the election, the stock market surged. While equities saw gains, crude oil prices remained relatively flat. Initial price support came from the potential for a hurricane in the Gulf, coupled with the anticipation of this week’s Federal Reserve meeting. However, as the hurricane threat subsided, crude prices began to decline as the “Trump Trade” took effect, with traders anticipating that Trump’s pro-oil stance might put downward pressure on crude prices.

Despite this, WTI crude prices held above the psychological support level of $70 per barrel. Along with China releasing continued poor economic data with weak stimulus, the Fed cut rates by another 25 basis points, and Chairman Powell stated he would not step down if requested by President Trump. Additionally, Trump is expected to exert significant pressure on Iran’s crude oil exports. Although Saudi Arabia could potentially fill any supply gaps, it’s unclear whether OPEC, alongside U.S. producers, would be interested in driving crude prices downward. As the dollar retreats from recent highs, crude oil becomes more expensive, which further supports prices. Should Trump successfully implement additional tax cuts and navigate the complexities of tariffs, American oil consumption could rise.

For these reasons, the “Trump Trade” has not pushed crude prices as low as some had anticipated. In fact, many traders predict that WTI will remain within the $70–$80 per barrel range throughout next year. I tend to agree; while the Trump administration may be “pro-oil,” this stance may not necessarily translate to lower crude prices.

In local news, the Chicago Spot Market has stabilized relative to the Group Spot market, and the harvest season is nearing completion without major disruptions. Prices traded steadily this week, so I do not expect significant changes at the pump in the coming days.

As for propane, it remains steady. Inventory levels are high, but any uptick in Chinese demand could lead to a surge in exports. Additionally, there’s caution surrounding the winter forecast, which suggests colder-than-average temperatures and above-average precipitation. For now, we enjoy the transition from autumn into the holiday season and await what the winter may bring.

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