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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

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