A Surprise Move Higher

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

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

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

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

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

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

Best regards,

Jon Crawford

So Much Head-Spinning Data

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Good morning!

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

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

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

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

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

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

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

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

Best regards,

Jon Crawford

Prices Fell Like Rock In Water

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Good morning!

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

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

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

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

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

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

Best regards,

Jon Crawford

Friday Retreat

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Happy Friday!

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

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

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

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

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

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

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

Best regards,

Jon Crawford

Tariffs and Diesel Disruption

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Good morning!

Happy Friday!  Crude oil markets traded within a narrow range during the week of July 21 to 25.  WTI crude finished the week down 3%, settling at around $66 per barrel.  While prices looked relatively steady, significant intraday volatility exposed deeper tensions building across both physical inventories and news headlines.

The biggest downward move came on July 22, when news broke that U.S.–EU trade negotiations had broken down. Fears of a potential 30% tariff resurfaced, rattling markets and sending WTI sharply lower. By the end of the week, sentiment rebounded somewhat as reports emerged of a tentative 15% baseline tariff agreement, alongside news of a landmark U.S.–Japan trade accord. These developments helped ease investor nerves and lent some support to crude prices. Still, the market stayed highly sensitive to trade headlines, and it’s clear policy risk continues to set the tone for oil price movement in the near term.

International dynamics added even more complexity this week.  In Europe, sanctions policy took center stage. The EU passed another sanction package on Russian crude oil and refined products.  Although the sanctions were designed to put pressure on Russian revenues, these measures had an immediate impact driving up the cost of diesel in Europe.  In addition to European sanctions, OPEC+ restored 400k barrels per day of crude in July and signaled plans to add 550k barrels per day in August. Those volumes, however, were largely absorbed by an imbalance in diesel inventory.  At the same time, the IEA revised its 2025 forecast for Chinese oil demand growth sharply downward, cutting expectations to just 80k barrels per day. That downgrade reinforced a growing sense that Asia’s largest consumer is nearing a plateau in oil consumption.

U.S. market fundamentals were tighter. Commercial crude inventories fell by 3.2M barrels, pushing stocks 9% below the five-year seasonal average.  And U.S. total liquids output reached a record 20.8M barrels per day. And drilling activity held steady, with only a minor decline in active rigs.  Demand trends painted a mixed picture. U.S. gasoline consumption was soft, averaging 9.5M barrels per day, down over 700k barrels from the same period last year. On the diesel side, things looked very different. While weekly implied demand appeared modest, monthly data showed that April usage ran nearly 5% above weekly estimates suggesting underlying freight and industrial demand remained solid. Inventories rose by 2.9M barrels, but still sat 19% below seasonal norms, which helped keep ULSD futures strong and widened the premium over gasoline.

In short, the crude market this week was more about refined-product tightness and geopolitical noise than about physical crude balances. WTI closed modestly lower, but the diesel market saw continued tightening.  Looking ahead, the market will be watching closely to see if OPEC+’s planned August supply increase can help offset diesel shortages, whether EU sanctions enforcement holds up, and if U.S. gasoline demand finds some legs.  Until we see a sharp downturn in global demand, diesel strength should continue to offer support for crude prices in the near term.

In local markets, gasoline and diesel prices continued to fall in the Chicago Spot market as refinery crack spread prices collapsed.  I believe we have peaked in price for the summer season as long as crude oil prices remain steady.  However, on Friday, the prompt spot month for Chicago changed to the September contract causing some basis support.  Therefore, I don’t expect to see much movement of retail prices on both gasoline and diesel in the coming days.

Propane inventories experienced a surprise draw this past week.  The announcement put an immediate floor on spot propane prices.  Summer fill prices are at the lowest price of the year and the same as last summer.  I highly recommend topping off your propane tank and locking in some gallons for the upcoming winter.

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

Best regards,

Jon Crawford

 

Continued Volatility Is The Name Of The Game

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Happy Friday!

Crude oil prices saw a modest increase this week, despite a market still dealing with a lot of uncertainty on both the supply and demand sides. The week started with serious supply disruptions in Iraqi Kurdistan, where drone attacks reportedly tied to Iran-backed militias knocked out nearly half of the region’s production for four consecutive days.  At the same time, the European Union rolled out its 18th round of sanctions against Russia. But enforcement is still questionable, and so far, these actions haven’t had the teeth to seriously dent Russia’s export ability. Meanwhile, President Trump threw in another wrinkle by giving Russia a 50-day deadline to resolve the war in Ukraine, threatening secondary sanctions on countries still buying Russian oil if a peace deal isn’t reached. The deadline gave the market some breathing room short-term, but traders are still uneasy over what could come next.

On the demand side, China reported a slowdown in economic growth in Q2, and the outlook for the second half isn’t looking too hot. Exports are dropping and consumer confidence is shaky. Since China makes up over 16% of global crude demand, their slowdown directly affects how oil trades. The concern is that even if supply tightens, slowing Chinese demand could soften prices, especially in the back half of the year.  Tariffs continue to be a wildcard. The administration announced new 25% tariffs on imports from Japan and South Korea, with more likely on the way for Canada, Mexico, and the EU. Energy products will most likely be excluded, but the uncertainty around broader global growth and trade relationships continues to hang over the market.  OPEC’s long-term view is that demand will keep climbing through 2050, with projections hitting 123 million barrels per day. The IEA doesn’t share the same opinions, calling for demand to slow and only hit around 104.4 million barrels per day next year. The difference in these forecasts continues to divide the industry on where we’re really headed.  Fuel consumption in the United States remains strong, especially in aviation and diesel. With summer driving season in full swing, demand is supporting higher gasoline consumption as well as higher global crude oil consumption.  In addition, drilling activities in the US are slowing down, supporting higher prices.

All-in-all, crude oil prices seem to be finding some support to move higher.  Diesel prices are climbing at a higher rate than gasoline.  My hope is that as summer demand decreases, we start to see inventory builds in diesel causing lower prices and higher supply going into the harvest season.

In local news, Chicago spot prices of gasoline continue to be weak in-line with other spot markets.  Even though demand for gasoline has been decent, supplies are outweighing demand keeping prices in check.   I don’t expect to see much movement on gasoline retail prices at the pump.  Diesel prices continue to whipsaw 20 cents back and forth.  Diesel prices are very volatile.  Prices were pushing back to recent lows and then climbed right back up.  I expect to see diesel retail prices at the pump to have high spreads depending on when retailers purchased fuel.

Propane spot prices fell this week due to another surprise massive build in inventory.  I truly believed that propane prices had found a floor.  Due to recent activity, we might see our retail price move lower.  I am stunned at the arbitrage between propane price and crude oil price.  I highly recommend taking advantage of the recent prices and contracting some heating gallons for the next season.

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

Best regards,

Jon Crawford

The Tariffs Have Returned

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Happy Friday!

I hope everyone had a great 4th of July weekend!  Crude oil prices saw moderate volatility between July 7 and July 11, ultimately rising 1.8% over the period. WTI began the week at $67.93 per barrel and closed at $68.45. That small net gain masked a week full of major market-moving headlines—ranging from OPEC+ supply shifts and renewed conflict in the Red Sea to fresh trade policy curveballs out of Washington and mixed demand signals globally.

On the supply side, the biggest news came from OPEC+. On July 5, eight member countries agreed to accelerate their production increases, committing to add 548,000 barrels per day in August—well above the previously expected 411,000 barrels per day. This marked a notable shift from the group’s earlier monthly hikes of 411,000 barrels per day in May, June, and July. OPEC+ framed the decision as a response to what it called a “steady global economic outlook and current healthy market fundamentals,” pointing to low oil inventories as justification. With this move, the coalition has restored 1.918 million barrels per day of the 2.2 million barrels originally withheld in voluntary cuts. That leaves just 280,000 barrels per day left to bring back online.

Geopolitical tensions also flared back into focus, with the first Red Sea shipping attacks since late 2024. Iran-backed Houthi militants in Yemen launched two major assaults. The Liberian-flagged Magic Seas was hit by drones, missiles, gunfire, and explosive-laden boats—ultimately sinking after its crew was evacuated to Djibouti. Another Liberian-flagged vessel, the Eternity C, was targeted over two days with drones and missiles, also sinking. Tragically, three crew members were killed and several others remain missing. The U.S. Embassy in Yemen accused the Houthis of kidnapping survivors. These incidents marked a renewed effort by the Houthis to disrupt global trade in retaliation for Israeli actions in Gaza. Given the Red Sea’s role in transporting roughly $1 trillion worth of goods annually, the attacks pushed a fresh geopolitical risk premium into oil prices.

Meanwhile, U.S. trade policy once again stirred market uncertainty. On July 7, President Trump announced a three-week delay in the implementation of new tariff rates, pushing the start date from July 9 to August 1. But the delay came alongside more aggressive measures: reciprocal tariffs between 15% and 46% on a wide range of countries, a 50% tariff on copper imports announced July 9, and new threats of additional tariffs on BRICS nations and other trade partners including Canada. These developments reignited worries about global growth and added another layer of volatility to the oil market.

The Energy Information Administration (EIA) also trimmed its 2025 oil production forecast, lowering it from 13.42 to 13.37 million barrels per day. The revision reflected softer oil prices, declining drilling activity, and mounting uncertainty tied to tariffs and rising OPEC+ output. Still, U.S. production remains on track to hit a record high this year, having already reached 13.4 million barrels per day in the second quarter.  Crude inventories in the U.S. posted a surprise build, rising by 7.07 million barrels—the largest increase since January. The size of the build caught markets off guard and added downward pressure to prices, signaling that supply was again outpacing demand despite peak summer driving season.  All told, it was an action-packed week. Looking ahead, until the trade policy picture becomes clearer, I expect continued volatility in oil markets.

In local markets, Chicago spot diesel price finally collapsed after a sharp runup. It looks like the earlier supply constraints have been resolved. I expect to see retail diesel prices trend lower next week. Gasoline demand, however, remains strong as we sit at peak summer consumption levels. That’s pushed gasoline prices up slightly.  I expect prices at the pump to hold steady around current levels for now.

Propane prices dipped a bit this week. Fundamentals remain weak due to strong national inventories running above the 5-year average.  And unless we get a very cold winter, the U.S. is well supplied. That said, we still recommend contracting some propane for the upcoming heating season—prices are currently in line with last year, and prompt-month values look to be at their lowest point for the year. If you can top off your tank by the end of August, now’s a good time to do it.

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

Happy 4th of July!

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Good morning!

I just wanted to take a quick moment and wish everyone a safe and happy 4th of July!  It’s going to be a hot one!  🙂  Also, I wanted to thank all our customers for thier business through the first half of the year!  Hard to believe that 2025 is half over!

I’m going to keep the update short and sweet.  Markets are always a bit wonky the week of holidays as traders take time off causing low liquidity.  Crude prices have been trading between $65-67/barrel.  Tariffs are getting worked out, the US economy looks good, but the dollar is losing value.  All of the these events are supporting crude oil prices.  However, OPEC meets over the weekend and expectations are for increased exports.  So far oversupply of crude oil in the world market seems to be keeping a lid on oil prices.  After the holiday weekend we will have a better idea of where things are heading.

Gasoline prices held this week so I don’t expect too many changes at the pump for the travel weekend.  However, diesel prices again jumped another 20+ cents/gallon this week on tight supplies.  Diesel inventories continue to be constrained.  I believe diesel prices will continue to be volatile throughout the next month or so.  Propane prices are holding steady with healthy inventories.  I still recommend topping off your tank this summer and contracting some gallons for the upcoming heating season.

Again, I hope everyone has a safe and happy 4th of July, and I will explore the markets in more detail next week after traders return to their desks.

Best regards,

Jon Crawford

Two Week Roller Coaster

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Happy Friday!  Over the past two weeks, crude oil and refined product prices went through one of the wildest stretches in recent memory. The biggest market-moving event was the outbreak of war between Israel and Iran. In just twelve trading days, the oil market priced in what felt like a year’s worth of geopolitical risk.  WTI crude oil price surged from $66/barrel on June 9th to $76/barrel by the close on June 20th, a staggering 15% gain—only to give it all back by June 27th! The price swing marked the most volatile move in nearly a decade.  The geopolitical rollercoaster started on June 13, when Israel launched airstrikes on Iranian nuclear facilities. WTI spiked 7% that day, settling at $74/barrel as traders scrambled trying to price in the risk of disruption in the Strait of Hormuz. That weekend, the situation escalated further when the United States joined the fight, targeting additional Iranian sites in Fordo, Natanz, and Isfahan. Futures opened 2 to 3% higher on Sunday night in response. But on June 23rd, President Trump announced a ceasefire brokered between Israel and Iran. Prices reversed sharply, with WTI falling 6% to $69 per barrel. In addition, Trump announced that China could continue to purchase Iranian oil pushing WTI price below $65/barrel.  The roller coaster ride reminded us once again, that geopolitical risk premium can appear—and disappear—almost overnight.

While markets were absorbing Israel/Iran headlines, traders were also anticipating pre-announced OPEC+ supply increases. The group had already scheduled 411,000 barrels per day in monthly hikes from April through June, part of the second phase in unwinding 2.2 million barrels per day of voluntary cuts. But traders largely shrugged off the supply-side developments, with compliance looking uneven and demand into mid-year still uncertain. Saudi and Russian officials, however, hinted that the July 6th meeting could lead to a pause—or even a reversal—of the August increment if prices softened. That signaling helped put a modest floor on WTI around $65/barrel.

In the United States, fundamentals tightened again. Commercial crude inventories fell by 11.5 million barrels in the week ending June 13 and another 5.8 million barrels the following week. That brought the total US crude oil stocks to about 11% below the five-year average. Refinery utilization surged to 94.7%, the highest level since July 2024, as plants pushed hard to meet summer-grade gasoline demand. Finished motor gasoline consumption hit 9.7 million barrels per day—a three-year high—driven by early summer travel and lower retail prices compared to 2022 and 2023. Meanwhile, distillate inventories dropped by 4.1 million barrels and are now sitting 20% below the five-year norm, keeping diesel spreads firm despite ongoing weakness in economic data.

Overall, the past two weeks displayed how volatile crude oil prices trade when conflict arises in the Middle East.  And again, there is always the reminder of looking at the 20k foot view when these events occur.  When looking above and ahead, not much really changed across the globe in terms of supply/demand.  Therefore, when these geopolitical events occur, it’s best to be patient before making any permanent decisions.  I expect Iran to not attack the Strait of Hormuz since they need the Strait to move their own products.  Therefore, as long as a ceasefire continues, the Middle East war premium seems to be back on the sidelines.  I expect to see WTI trade in a narrow range around $65/barrel until some supply/demand fundamentals are worked out.  Again, my advice is to be patient and play the cost-average game for the remainder of the year.

In local news, the Chicago Spot Market moved to trading the July contract this week without much fanfare.  The contract pricing fundamentals show that supply is predicting to be steady.  Diesel prices jumped nearly 35 cents per gallon and dropped right back down, along with gasoline prices: absolutely bananas!  I don’t know what to expect at the pump for retail prices.  Everything depends on when stations purchased fuel.  The volatility of spot pricing usually takes about a week to flush through the retail system, so I would expect erratic pump prices over the next few days.

Propane prices were not too affected by the roller coaster.  However, I do not expect to see summer prices fall unless we experience a significant pull-back in crude oil price.  The next season’s heating contracts have been released and the prices are the same as last year.  There is great value in contracting for the upcoming year.  I always recommend locking in at least some of your predicted heating consumption for the winter.  And if you have room in your tank, I also highly recommend topping your tank off these current rates.

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

Where Do We Go From Here

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Good morning!

Happy Friday the 13th.  Crude oil markets saw one of the most volatile weeks in years following a major military escalation in the Middle East. In the early hours of June 13, Israel launched its largest attack on Iran since the Iran-Iraq War, codenamed “Operation Rising Lion.” The operation involved over 200 aircraft dropping more than 330 munitions across roughly 100 targets throughout Iran. The strikes focused on nuclear facilities, key military infrastructure, and high-level leadership sites. Reports confirmed that various nuclear enrichment locations, air defense systems, IRGC headquarters, and several military leaders and nuclear scientists were all targeted and hit.  Iran wasted no time in responding, launching more than 100 drones toward Israel. Supreme Leader Ayatollah Ali Khamenei issued a stern warning that Israel would face a “bitter and painful” response. Despite the intense military exchange, Iranian state media announced that oil production and operations remained unaffected. The country’s largest refinery, the 700,000 barrel-per-day Abadan plant, reportedly continued running at full capacity without disruption.  The timing of the Israeli operation is especially notable, coming just days ahead of planned nuclear negotiations between the U.S. and Iran in Oman. Two U.S. officials said the Trump administration had told Israel that any strike would be a “solo mission” and that the U.S. would not provide direct military support. Following the attacks, Trump issued a strong warning to Iran, stating that if another wave of Israeli strikes occurred, they would be “even more brutal,” and he encouraged Iran to strike a deal “before there is nothing left.”

The impact on oil markets was immediate. Brent crude surged as much as 13% in early trading, briefly topping $78 per barrel, while WTI jumped over 8%, hitting $73.61 per barrel. This was the largest single-day percentage gain in years. Analysts attributed the spike to both immediate supply concerns and broader fears of escalation across the region. The Middle East is responsible for roughly one-third of global oil production, and markets are on edge over any threat to the Strait of Hormuz, where nearly 20% of the world’s crude oil is transported. If Iran were to block the Strait, many analysts predict oil could surge past $100 per barrel. That said, both Saudi Arabia and the UAE have significant spare capacity and could offset a shortfall in Iranian exports relatively quickly, within about 30 days.

Amid all of this, trade talks between the U.S. and China continued to move in a positive direction. The two countries reached a major trade framework agreement after meetings in London on June 9 and 10. This follows earlier progress made in Geneva last month. One of the key items addressed was China’s export of rare earth minerals and magnets to the U.S., a topic that has been front and center in negotiations. The announcement of the deal helped support oil prices earlier in the week, and the U.S. continues to push forward with trade discussions with the UK, India, Japan, and the EU.

However, not all news this week was bullish for crude oil prices.  Another factor that played into oil price movements this week was the strength of the U.S. dollar. A strong dollar usually keeps oil prices lower, and this week was no exception. A better-than-expected 30-year treasury auction drove traders into the dollar as a safe haven amid mounting geopolitical risk. This helped limit the upside for crude prices before the Israel-Iran situation unfolded.

Meanwhile, the domestic supply situation in the U.S. remains a bit bullish. The EIA reported another drawdown of 1.7 million barrels from crude oil inventories. Diesel remains a little tight, with inventories still sitting at 17% below the five-year average.  However, I am not concerned about major supply disruptions as we move through summer and into the harvest season.  Although supply logistics will be an issue in the fall, we will still be able to handle harvest.

With so much news this week, I think it’s important to take a step back and look at the bigger picture. Yes, we saw a big move in crude oil prices, and yes, geopolitical risk is very real. But when we strip it all down, the fundamentals of supply and demand still remain fairly balanced. There is enough crude oil in the world to meet demand, and while shipping disruptions could happen, they should likely be short-lived. I believe this price surge is temporary, and unless there is another major escalation, we’ll see WTI settle back into the $60–$65 per barrel range.

In local markets, the Chicago spot market continues to be well supplied and is trading below the Group, offering great value for our customers. Gasoline prices have stayed fairly stable, but diesel prices have been climbing due to tighter inventories and the recent jump in crude oil price. With the spike in oil today, I expect to see both diesel and gasoline prices at the pump move higher in the coming days.

Propane is also being impacted by the increase in oil price, although the price rise has been modest so far. We are doing our best to hold current retail prices. With crude oil running hot right now, I strongly recommend filling up your propane tank at the current rate. We also encourage customers to contract gallons now for the upcoming winter season. Contracts are available and offer excellent value considering the current environment.

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

Best regards,

Jon Crawford