Happy Friday!

WTI crude oil is looking to end the week below $60 per barrel, marking the second consecutive weekly drop. After briefly finding support midweek, prices slipped again as traders refocused on oversupply and soft economic data.

The war in Ukraine remains intense. Russia has gone on the offensive, targeting the city of Pokrovsk, a key transport and logistics hub for Ukraine. In retaliation, Ukraine struck a Lukoil refinery, escalating damage to Russian oil infrastructure and sparking a brief price rally on Thursday. But as the dust settled, traders shrugged off the event, believing Russia will eventually reroute its barrels somewhere.  Russian exports continue to slide under sanctions, and crude is piling up on tankers across the Asia-Pacific region. Turkey’s decision to scale back Russian purchases has only added to the pressure. A large amount of Russian oil now sits on ships waiting for a home, and if sanctions are ever lifted, a wave of barrels could flood the market.  Meanwhile, Venezuela continues to face political uncertainty. Hints of regime change could eventually open its oil market to more exports, adding to global oversupply. For now, Venezuelan shipments are falling, with most barrels still heading to China.

OPEC announced a small production increase, far less than prior moves, and confirmed there will be no new output hikes in the first quarter as global inventories continue to rise. Analysts now estimate a global surplus ranging anywhere from 200,000 to 3 million barrels per day next year.  Overall, OPEC’s total output rose in October, reinforcing the oversupply story. Traders digested the decision quickly and kept bearish sentiment in place. Saudi Arabia continues to chase market share, cutting its official selling prices to the lowest level in eleven months.

Adding to the glut, China’s manufacturing activity shrank again in October, marking six straight months of contraction. Export orders also fell at the fastest pace since May. China is simultaneously increasing domestic drilling to reduce import dependence, which ultimately adds more crude to the global market. India has also joined the ranks of secondary sellers, re-exporting Russian barrels and building up inventories at home.

On Wednesday, WTI fell below the $60 floor as U.S. inventories climbed, according to the latest EIA report. The ongoing government shutdown is adding more downward pressure to sentiment.  On the economic front, 42,000 U.S. jobs were added last month, signaling a still-healthy labor market. That strength makes it less likely the Fed will cut rates in December, keeping the dollar strong and commodities cheaper. Meanwhile, U.S. manufacturing contracted for the eighth straight month, which supports a bearish case for crude demand.  Market watchers also noted that the “Buffett Indicator,” which measures total stock market value against GDP, has crossed the 2.0 mark. The last time this occurred was in 2001, just before the market collapse. If equity markets were to correct sharply, it could spill into commodities and potentially trigger a “black swan” event for crude if the current surplus expands into early next year.

The Chicago spot market remains an absolute mess. The Westshore Pipeline, which supplies Wisconsin with refined products from Chicago, continues to be shut down. The outage has caused widespread shortages at terminals across south-central Wisconsin.  Thankfully, the harvest season is wrapping up, but diesel and gasoline prices have been extremely volatile, with massive intraday swings. Predicting retail prices right now is nearly impossible—most buyers are simply taking whatever diesel they can find.  Resupply is expected to improve next week as product starts flowing from both the southern and northern systems, which have also been on allocation for over a month. This 15-day stretch has been one of the wildest supply crises in the region in nearly a decade.

Propane continues to hover near the lower end of its trading range. Inventories built again last week as crop-drying demand tapered off, but colder weather is on the way. Forecasts are calling for a deep freeze across the Midwest over the next 7–10 days, which should quickly draw down national inventories and lend more support to prices.  Despite record storage levels, propane remains well-positioned to firm up once winter demand kicks into high gear.

As always, if you have any questions, please don’t hesitate to give us a call.  Have a great weekend!

Best regards,

Jon Crawford

Happy Friday!

Crude oil prices are set to close the week at their lowest level in 16 weeks, with WTI hovering around $61/barrel. At this point, it looks more likely that prices will break lower rather than higher. Even though geopolitical headlines would normally push prices up, the world’s oversupply of crude oil has finally taken center stage. I’ve been emphasizing the oversupply theme for some time, and it seems traders are now seeing it the same way.

The biggest weight on prices this week comes from OPEC+, ahead of their weekend meeting. The group has made it clear they plan to keep raising production, citing a more optimistic view of global oil demand. Last month, OPEC+ already met its production increase target, further adding to the market glut. These moves are keeping strong downward pressure on crude, despite ongoing geopolitical risks.  With OPEC+ increased production, China continues to buy heavily for storage, which has provided a price floor. But if Beijing slows purchases, oil prices could quickly collapse.

On the geopolitical front, President Trump unveiled a 20-point peace plan for Israel and Palestine. So far, world leaders doubt it will lead to a ceasefire. Fighting continues, but since it hasn’t spread into neighboring countries, oil traders aren’t treating it as a supply risk.  Ukraine also made headlines. The U.S. announced it is going “all-in” on the war, supplying Ukraine with long-range missile intelligence targeting Russian energy infrastructure, and even considering sending Tomahawk missiles. While such developments could normally send oil prices higher, markets have largely shrugged them off. Russian oil revenue is down, though the true amount is hard to measure. Meanwhile, U.S. and G7 leaders are pushing for tighter sanctions, but some Eastern European nations remain reliant on Russian crude out of necessity.

In the U.S., crude inventories rose again this week, reinforcing the oversupply narrative. On the economic front, consumer confidence fell to a five-month low, and the government shutdown cancelled the jobs report. Normally, a weaker dollar would support higher oil prices, but historically crude demand falls during shutdowns, and traders are pricing that in.

Here at home, Chicago spot gasoline and diesel prices fell alongside crude. That should translate into lower pump prices next week. Harvest season is in full swing, which could cause some isolated diesel shortages, but inventories look healthy overall.  I don’t expect any long-term diesel issues during harvest.

Propane prices ticked up slightly as we shift into winter pricing, though with strong storage levels and warm weather in the forecast, I don’t expect much movement in the near term.  Propane is somewhat boring at the moment but depending on crop-drying, the situation could change quickly.

As always, if you have any questions, comments, or concerns, please don’t hesitate to reach out. Wishing you a great weekend!

Best regards,

Jon Crawford

Good morning!

Happy Friday!  This past week, crude oil prices are on track to close at their highest level in over three months.  On Friday WTI shot through the psychological barrier of $65/barrel.  A mix of geopolitical developments and economic data, both domestic and global, pushed prices higher.

The biggest news came from President Trump, who shifted his stance on Ukraine. He now believes Ukraine can fully reclaim its lost territory and win the war. That rhetoric rattled oil markets on fears of a potential cutoff of Russian crude and refined products from the global market.  Russia added fuel to those concerns by officially announcing a ban on diesel exports. Ukrainian drone strikes have knocked out roughly 25% of Russia’s diesel production capacity. At the same time, tensions are rising as drones continue to cross into Polish airspace, prompting worries of potential NATO involvement. Any expansion of the conflict beyond Russia and Ukraine would be extremely bullish for oil prices.

On the global supply side, the Kurdistan oil export pipeline in Iraq officially restarted, adding about 200,000 barrels per day of crude. OPEC has asked Iraq to cut production since most spare capacity rests with Saudi Arabia and the UAE, but Iraq has resisted and continues to pump above quota.  India surprised the market by increasing exports of gasoline and diesel, though much of this appears to be offsetting Russia’s lost exports, leaving global balances little changed. ExxonMobil also announced it is doubling down on Guyana, with production there expected to reach 1.7 million barrels per day by 2030. Meanwhile, Iran’s exports remain strong even though China cut its purchases nearly in half.

The only notably bullish global supply headline this week came from Chevron, which can now export only half of its normal quota from Venezuela. Overall, while most supply data leaned bearish, the market is beginning to shift toward expectations of stronger world demand ahead.

As the world’s largest consumer of oil, U.S. data was interpreted as supportive for crude prices, though I remain cautious. Q2 consumer spending was revised higher, though much of that came from inflation caused by tariffs rather than true growth. Traders continue to price in additional Fed rate cuts to stimulate the economy.  At the same time, jobless claims dropped, while inflation moved higher—signs of potential stagflation, where growth slows but inflation persists. This scenario could keep energy prices elevated. Looming in the background is also the risk of a U.S. government shutdown.  On the US supply side, the EIA reported a smaller-than-expected decline in crude inventories, though it was still a draw. Diesel prices are steadily climbing as Midwest harvest demand ramps up and the Northeast begins storing heating oil barrels for winter heating. With Russian diesel exports banned, traders are adding further upward pressure.

Locally, the Chicago Spot Market rolled to the November contract. Diesel prices rose modestly on increased harvest demand, while gasoline prices held relatively steady. I expect retail gasoline prices to remain stable, but diesel prices at the pump are likely to move higher in the coming weeks.  Unfortunately, I believe we will see diesel prices elevated while demand in the US remains strong and the global supply of diesel gets direction.

Propane prices continue to trade sideways despite the rise in crude oil prices. The EIA reported a smaller-than-expected build in inventories, but usage reports for crop drying remain inconsistent. By mid-October, demand trends should become clearer.  Weather forecasts have also shifted—October is now expected to be slightly warmer than normal rather than colder. For now, propane is taking a breather, though I expect modest price increases once contracts roll into October and winter economics take effect.

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 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