Tag Archives: Dane

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