Tag Archives: Poynette

Still Trading In A Small Window

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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

Jitters Continue To Hold Steady

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Happy Saturday!

This past week crude oil prices were very volatile but ultimately ended lower, driven by forecasts of a global supply surplus in Q4 2025 and throughout 2026. While OPEC continues to emphasize that demand will grow next year, the IEA stated this week that a surplus in daily production is inevitable at current levels unless there is a sharp increase in demand or a significant loss of supply.  Geopolitical events, however, were strongly bullish for crude oil. Israel carried out an airstrike in Qatar, targeting Hamas leadership that was meeting in Doha to discuss a ceasefire deal. The attack angered the United States, which had been brokering the talks, and all but eliminated the possibility of a ceasefire between Israel and Hamas. This escalation also raised concerns that the conflict could spill into nearby oil-producing countries.  Meanwhile, Ukraine struck Russian crude export terminals and even hit two oil cargo ships—an unprecedented escalation aimed at disrupting Russia’s main source of revenue. Still, Russia has managed to keep its exports flowing. India announced it would scale back some purchases of Russian crude, but China stepped in to take additional volumes, ensuring Russia continues to find buyers.

In the U.S., the economic data released this week leaned heavily bearish for oil demand and raised fears of stagflation—a scenario where economic growth slows while inflation keeps rising. Jobless claims were revised sharply higher, lumber prices fell, payroll figures were adjusted downward, and inflation readings came in hotter than expected. This leaves the Federal Reserve in a difficult position: cut rates to stimulate growth and risk fueling inflation, or hold rates steady to keep the dollar strong and press inflation lower, while potentially slowing the economy further. Either way, the uncertainty is making oil traders cautious and keeping prices under pressure.  Adding to the bearish tone, the EIA reported a very large build in crude, gasoline, and distillate inventories. Following the report, oil producers in the Permian Basin announced they are lowering job forecasts for the rest of 2025 and into 2026—further confirmation of a softening outlook.

In summary, my strategy remains the same—sit back and wait. The risks point more toward crude oil moving lower than spiking back toward $70 per barrel.

In our local spot market, gasoline prices continue to fall as summer demand drops off. Chicago refiners have also transitioned to producing winter-grade gasoline (lower RVP), which is cheaper to make than summer blends, adding more downward pressure. Diesel prices also moved lower alongside crude, despite a major Midwestern refinery currently offline for annual maintenance. For now, supplies in the Chicago market appear ample heading into harvest season.

Propane prices remain range-bound, showing little movement despite volatility in crude. That said, I continue to strongly recommend topping off propane tanks now and locking in gallons for the winter. The 90-day forecast is calling for colder weather compared to last year. If strong heating demand overlaps with crop drying season, propane prices could spike earlier than usual.

Best regards,

Jon Crawford

First Loss In Weeks

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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

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