Good morning!

Happy Friday!  Crude oil prices traded in a very narrow range this week, with few geopolitical or economic developments to push the market decisively in either direction. Every piece of news seemed to be offset by another data point or forecast, keeping prices relatively steady.  The biggest global news came from the war in Ukraine. Over the past weekend, Ukraine struck another oil refinery and export facility, followed on Thursday by an attack on a major petrochemical plant and refinery. Ukraine has now hit more than ten Russian refineries in total. By the end of the week, Russia announced that exports could fall by 300,000–400,000 barrels per day due to the damage. While this caused a brief price spike, overall supply and demand concerns continued to weigh heavily on sentiment.

China again released very weak economic data this past week. Retail sales, fixed-asset investment, and industrial production all missed expectations, with some readings hitting nearly five-year lows. As one of the world’s largest crude importers, any decline in Chinese demand raises the risk of oversupply. Both the IEA and EIA continue to warn that global markets will face a supply surplus by late 2025. OPEC, on the other hand, insists demand will keep pace with production growth—but so far, traders see little evidence of a sharp increase in demand on the horizon.

In the U.S., attention shifted to the Federal Reserve. While the EIA reported a large crude inventory draw on Wednesday, markets were more focused on the Fed’s rate cut. The Fed lowered rates by 25 basis points and signaled up to 50 more basis points of cuts could come before year-end. Stocks jumped on the news, but crude oil did not follow as many expected. The U.S. dollar continues to trade near its lowest level in a decade. Normally, a weaker dollar supports higher oil prices, since commodities are dollar-denominated. But this time, uncertainty around tariffs and inflation is dampening enthusiasm. Some economists argue that without stronger tax relief, tariffs may do more harm than good, leaving the economy struggling to grow despite lower rates. For now, oil markets remain on edge, with traders waiting for clearer signals. I don’t expect much movement in crude prices until harvest season wraps up.

Harvest is now underway in the Midwest. Supplies remain ample, even though a major regional refinery is offline for maintenance until the end of October. The Chicago Spot Market is trading at a slight premium to the Group market, though the spread is narrow. Prices have been volatile but range-bound, moving in step with crude. Expect to see gasoline and diesel pump prices fluctuate frequently in the days ahead, but in a very narrow window.

Propane inventories remain healthy, though this week’s EIA report showed a smaller-than-expected build. The lighter build may be tied to the start of harvest, higher export volumes, and lower refining runs. Over the next six to eight weeks, we’ll get a much clearer picture of propane supply heading into winter. For now, I continue to recommend topping off tanks before cold weather arrives and locking in winter gallons while prices remain favorable.

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 Friday!

I hope everyone had a safe and enjoyable Labor Day weekend. With markets closed on Monday for the holiday, this was a shortened trading week. WTI is on track to close lower, marking the first weekly loss in three weeks. The main drivers were growing signs of a supply glut and weaker U.S. economic data.

Geopolitical headlines leaned bearish as well. While Ukraine continues to successfully target Russian oil infrastructure, Russian crude exports remained strong, particularly to China. In fact, China purchased a record amount of Russian crude last week, underscoring its allegiance with Moscow. The Trump administration responded by tightening sanctions on Iranian oil and enforcing sanctions on India for continuing to buy Russian barrels. Still, Iranian exports flowed uninterrupted, Russian shipments to China remained steady, and India—though trimming volumes—continued buying regardless of sanctions. Russia has kept prices low to help offset the impact of these restrictions.

OPEC is meeting this weekend, and most expect the group to continue with its expanded supply quotas. The increase has now unwound years of prior production cuts. Saudi Arabia has also signaled that any remaining voluntary cuts will be phased out. Traders widely believe that even if OPEC were to freeze production quotas at current levels, the global market will still tip into oversupply. Adding to that, Mexico recently announced large shale discoveries, and Syria has resumed oil exports for the first time in years.

In the U.S., the EIA reported that crude inventories rose last week despite strong refinery utilization. On Friday, the jobs report came in below expectations, with unemployment ticking higher. This combination of supply builds and weaker labor data reinforced expectations that the Federal Reserve will cut rates at its September meeting. While lower interest rates and a weaker dollar would typically support oil prices, concerns about an economic slowdown—driven by tariffs and widespread corporate cost-cutting—are outweighing that effect. Many companies are now grappling with stretched balance sheets as the extra liquidity from COVID-era stimulus and Fed equity purchases has dried up. Layoffs of 25% or more have already been announced at several major firms heading into year-end.

Overall, while conflict risks in Israel/Palestine/Yemen and Russia/Ukraine still create a war premium, the world economic data increasingly points toward a global crude supply glut heading into late 2025 and 2026.

In local news, the Chicago diesel market briefly spiked on expectations of strong demand for the upcoming harvest. With Midwest harvest yields projected to be very high, diesel demand could be elevated. By week’s end, however, diesel prices eased as crude oil price fell and refinery utilization stayed strong. I don’t expect significant changes in diesel pump prices near term. Gasoline prices, meanwhile, declined following the Labor Day holiday. This was expected as summer driving season winds down and demand softens. I anticipate retail gasoline prices to move lower next week.

Like a broken record, propane remains the “sleeper” of the market. While prices are still trading in a narrow range, winter economics officially begin October 1. In central Wisconsin, we are already seeing some of the coldest September weather in years. With forecasts pointing to colder-than-normal conditions in October—and strong crop yields—there is a real risk of heating demand overlapping with corn drying needs. Northern Wisconsin has already experienced brief frost, and early frost across parts of the Midwest remains a possibility next month. I continue to strongly recommend topping off propane tanks now at summer pricing and locking in heating gallons ahead of the 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

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

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 1^st 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

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