Tag Archives: Sauk City

Where Do We Go From Here

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Good morning!

Happy Friday the 13th.  Crude oil markets saw one of the most volatile weeks in years following a major military escalation in the Middle East. In the early hours of June 13, Israel launched its largest attack on Iran since the Iran-Iraq War, codenamed “Operation Rising Lion.” The operation involved over 200 aircraft dropping more than 330 munitions across roughly 100 targets throughout Iran. The strikes focused on nuclear facilities, key military infrastructure, and high-level leadership sites. Reports confirmed that various nuclear enrichment locations, air defense systems, IRGC headquarters, and several military leaders and nuclear scientists were all targeted and hit.  Iran wasted no time in responding, launching more than 100 drones toward Israel. Supreme Leader Ayatollah Ali Khamenei issued a stern warning that Israel would face a “bitter and painful” response. Despite the intense military exchange, Iranian state media announced that oil production and operations remained unaffected. The country’s largest refinery, the 700,000 barrel-per-day Abadan plant, reportedly continued running at full capacity without disruption.  The timing of the Israeli operation is especially notable, coming just days ahead of planned nuclear negotiations between the U.S. and Iran in Oman. Two U.S. officials said the Trump administration had told Israel that any strike would be a “solo mission” and that the U.S. would not provide direct military support. Following the attacks, Trump issued a strong warning to Iran, stating that if another wave of Israeli strikes occurred, they would be “even more brutal,” and he encouraged Iran to strike a deal “before there is nothing left.”

The impact on oil markets was immediate. Brent crude surged as much as 13% in early trading, briefly topping $78 per barrel, while WTI jumped over 8%, hitting $73.61 per barrel. This was the largest single-day percentage gain in years. Analysts attributed the spike to both immediate supply concerns and broader fears of escalation across the region. The Middle East is responsible for roughly one-third of global oil production, and markets are on edge over any threat to the Strait of Hormuz, where nearly 20% of the world’s crude oil is transported. If Iran were to block the Strait, many analysts predict oil could surge past $100 per barrel. That said, both Saudi Arabia and the UAE have significant spare capacity and could offset a shortfall in Iranian exports relatively quickly, within about 30 days.

Amid all of this, trade talks between the U.S. and China continued to move in a positive direction. The two countries reached a major trade framework agreement after meetings in London on June 9 and 10. This follows earlier progress made in Geneva last month. One of the key items addressed was China’s export of rare earth minerals and magnets to the U.S., a topic that has been front and center in negotiations. The announcement of the deal helped support oil prices earlier in the week, and the U.S. continues to push forward with trade discussions with the UK, India, Japan, and the EU.

However, not all news this week was bullish for crude oil prices.  Another factor that played into oil price movements this week was the strength of the U.S. dollar. A strong dollar usually keeps oil prices lower, and this week was no exception. A better-than-expected 30-year treasury auction drove traders into the dollar as a safe haven amid mounting geopolitical risk. This helped limit the upside for crude prices before the Israel-Iran situation unfolded.

Meanwhile, the domestic supply situation in the U.S. remains a bit bullish. The EIA reported another drawdown of 1.7 million barrels from crude oil inventories. Diesel remains a little tight, with inventories still sitting at 17% below the five-year average.  However, I am not concerned about major supply disruptions as we move through summer and into the harvest season.  Although supply logistics will be an issue in the fall, we will still be able to handle harvest.

With so much news this week, I think it’s important to take a step back and look at the bigger picture. Yes, we saw a big move in crude oil prices, and yes, geopolitical risk is very real. But when we strip it all down, the fundamentals of supply and demand still remain fairly balanced. There is enough crude oil in the world to meet demand, and while shipping disruptions could happen, they should likely be short-lived. I believe this price surge is temporary, and unless there is another major escalation, we’ll see WTI settle back into the $60–$65 per barrel range.

In local markets, the Chicago spot market continues to be well supplied and is trading below the Group, offering great value for our customers. Gasoline prices have stayed fairly stable, but diesel prices have been climbing due to tighter inventories and the recent jump in crude oil price. With the spike in oil today, I expect to see both diesel and gasoline prices at the pump move higher in the coming days.

Propane is also being impacted by the increase in oil price, although the price rise has been modest so far. We are doing our best to hold current retail prices. With crude oil running hot right now, I strongly recommend filling up your propane tank at the current rate. We also encourage customers to contract gallons now for the upcoming winter season. Contracts are available and offer excellent value considering the current environment.

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

A Little Boring Last Week

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Happy Monday!

I ran out of time last week to send out a quick update, however, not much happened in the world of crude oil.  Last week crude oil markets were driven by global trade negotiations and wildfires in Canada.  WTI price continues to hold a strong floor at $60/barrel.  On June 5th, Trump and Xi Jinping were reported to have a positive discussion on resolving the trade war between both countries.  Crude oil markets were well supported due to potential increased consumption in both the U.S. and China.  Although OPEC has reported to increase production by 400k barrels per day, wildfires in Canada have shut down about 400k barrels per day of production.  Therefore, the markets are currently experiencing a bit of an offset to the OPEC production increases.  The EIA reported another draw of crude oil stockpiles.  The past week inventories fell by 4.3M barrels.  Currently, the U.S. inventories are 7% below the five-year average.  Therefore, although the potential for an oversupplied market are in the cards, for now other

In local markets, the Chicago spot market continues to be volatile as predictions for summer demand season differ.  In addition, supplies are tight in various markets.  However, gasoline prices continue to fall.  As you have noticed, retail prices of gasoline continue to drop.  However, diesel prices continue to trade volatile, but very narrow.  Therefore I don’t expect to see much change of on retail diesel prices.

Propane prices are also holding very steady.  I do not expect to see any movement on propane retail prices unless crude oil prices fall hard below $60/barrel.  I suggest that everyone tops off their propane tank at the current prices and contract some gallons for the upcoming heating season.

As always, if you have any questions, comments, or concerns, please feel free to give us a call!

Best regards,

Jon Crawford

A Little Topsy-Turvy

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Good morning!

Happy Friday! Crude oil prices are closing out the final week of May in a bit of a slide, with traders trying to make sense of a whirlwind of geopolitical events, supply shifts, and the ever-changing outlook for global demand. While some of the news out there could push prices up, we’re seeing more downward pressure—at least for now.  One of the big drivers this week was chatter around OPEC+ hinting at a larger production increase starting in July. The increase, possibly over 400,000 barrels per day, would come sooner than expected and, if finalized, would be a major step toward rolling back pandemic-era cuts. The market responded fast—just the idea of more barrels coming into play was enough to send prices lower.  Globally, we saw a split in demand forecasts. The International Energy Agency is calling for demand to hit 104 million barrels per day in 2025, while OPEC is still expecting closer to 105 million. That gap in outlooks is making traders second-guess where prices might head next.

At the same time, the U.S. tossed another curveball into the mix. Early in the week, we saw prices climb briefly after a trade court ruled that some Trump-era tariffs were illegal. But that bounce didn’t last long. A federal appeals court stepped in and put the tariffs back in place—at least for now—reigniting market worries and pulling prices down more than one percent in a single day. The uncertainty around trade policy continues to rattle investors and oil markets alike.  Looking at domestic numbers, crude oil fundamentals in the U.S. remained fairly strong. The EIA reported a 2.8 million barrel draw in commercial inventories, bringing the total down to about 440 million barrels, which is six percent below the five-year average. Production is holding up, with the four-week average running at just over 13.3 million barrels per day—well above where we were this time last year. Refiners are still busy, although we saw a slight dip in utilization, now just above 90 percent. Imports bumped up to 6.4 million barrels per day, but on average are still running more than ten percent below 2024 levels. Exports are holding steady too, sitting just over 4.3 million barrels per day, keeping the U.S. in its role as a major supplier to the world.

China added some weight to the bearish outlook this week. A new forecast from CNPC has China’s oil demand peaking in 2025, a full five years earlier than previous estimates. This change is driven by the country’s shift toward electric vehicles and other clean energy sources. They’re expecting demand to top out at 770 million tons this year, before falling steadily over the coming decades. The long-term implications are huge—not just for oil demand in China, but for the entire global energy landscape.

Despite all that, gasoline and diesel numbers offered a little relief. Gasoline inventories dropped by 2.4 million barrels and are now about three percent below normal. Production was strong at 9.8 million barrels per day, and demand looked healthy with supplied product just over 9 million barrels. Diesel and heating oil also showed signs of tightening. Inventories fell again and are now 17 percent below the five-year average. Demand was strong here too, with a four-week average just under 3.7 million barrels per day—still being driven by industrial and ag sectors.

All in all, the past week in crude markets was marked by a balancing act. On one side, you’ve got decent domestic demand and falling inventories helping to keep things steady. On the other, you’ve got rising global production, mixed demand forecasts, and a huge amount of trade and policy uncertainty dragging things down. As we move into June, eyes will stay focused on OPEC’s production decisions, how the U.S. handles its trade policy, and what kind of ripple effects come from the global energy transition.

In local news, as crude oil prices dropped, the Chicago spot market experienced a decline in refined prices as well.  The current contract-trading month moved to July this past week and the spot market moved lower.  The price signal lower on out months means that the Chicago spot market is possibly oversupplied going into high demand season.  Or the markets are predicting weaker demand this summer.  I expect to see prices of both gasoline and diesel drop at the pump in the coming week.

Propane prices continue to trade very narrowly.  Conway propane storage is not building at a fast enough rate to push inventories above the 10-year average for this time of year.  Although there is weakness with crude oil prices, I don’t expect to see propane spot prices drop hard during the summer.  I would recommend topping off your tank by September if you can and contracting some propane for the upcoming heating season.  Our contracts are out, and you can call the office today to sign up!

As always, if you have any questions, comments, or concerns, please feel free to give us a call!  Thanks, and have a great weekend!

Best regards,

Jon Crawford

Have A Great Memorial Day Weekend!

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Good morning!

Happy Friday!  I hope everyone is ready to enjoy a safe and relaxing Memorial Day weekend. Crude oil prices are looking to close lower for the first time in weeks, with this being the first weekly decline since April. Despite the drop, the price action this week was narrow considering all of the geopolitical and economic headlines that could have sent the market sharply in either direction.  The main drivers of higher price speculation continue to come from the Middle East. Israel appears to be preparing for possible attacks on Iranian nuclear sites. In response, Iran has threatened to shut down the Strait of Hormuz if Israel follows through. The Strait of Hormuz is the most critical shipping corridor for crude oil in the world. At the same time, discussions between Russia and Ukraine have stalled again. Although Russian oil continues to flow, China and India are buying cheap Russian barrels and storing as much as possible while prices remain low.

Back in the U.S., Trump is threading the needle on foreign policy and economic deals in the Middle East. The administration is actively cutting deals with both allies and adversaries. If these agreements are successful, they could reduce regional tensions and bring major economic benefits to the U.S.  Additionally, there is growing chatter that the U.S. may not renew leases in Venezuela that allow Chevron to export crude to U.S. Gulf Coast refineries. If these leases are not renewed, the loss of Venezuelan crude would be a blow to the southern U.S. refining sector.  The one piece of geopolitical news that pushed crude lower was progress on trade negotiations between the U.S. and China. Both countries are making strides toward a deal, and any agreement would likely increase economic activity and boost crude demand.

On the supply and demand front, bearish news mostly dominated the week. Crude inventories in the U.S. continue to grow, but demand is expected to rise heading into summer, which could balance out the market. The U.S. government is also continuing to refill the Strategic Petroleum Reserve. Meanwhile, refining margins remain strong, giving oil companies incentive to keep buying crude and produce refined products for domestic use and export.  Looking ahead, OPEC meets on June 1st and is expected to announce a significant increase in global exports. If OPEC does indeed bring more barrels to market, a surplus becomes a real possibility. That said, U.S. drillers are continuing to shut down rigs at a quick pace, which could help offset the potential surplus from OPEC and keep the market balanced.  Adding to the market’s volatility are continued tensions in Gaza, new tariffs aimed at pressuring Apple to manufacture iPhones in the U.S., additional sanctions on the European Union, and the upcoming hurricane season. Summer demand in the U.S. is also set to pick up soon, which could add further pressure to prices.

Even though crude oil is closing lower this week, I still don’t see prices falling too much further. We may briefly dip into the upper $50s per barrel, but I don’t believe prices at that level would hold for long.

In local news, gasoline and diesel supplies are finally balancing out in the Chicago market. I expect to see both products move lower in price next week. Thankfully, refinery maintenance on gasoline production is wrapping up just in time for the summer driving season. The Chicago Spot Market continues to trade cheaper than the Group, but the spread is not wide enough to cause Group buyers to switch over to Chicago barrels. That said, the discount is helping to keep inventories in our region at healthy levels.

Propane prices remain stubbornly firm as Midwest inventories continue to lag about 20% behind the five-year average. I don’t expect much of a drop in price from here. My recommendation remains the same: top off your tanks now and consider locking in some gallons for next heating season. Contract pricing for next year has been released, and it’s the same as last year! With the cost of nearly everything else continuing to rise, it’s great to be able to offer customers good value on something as essential as home heat.

As always, if you have any questions, comments, or concerns, please feel free to give us a call. Have a great weekend and enjoy your Memorial Day!

Best regards,

Jon Crawford

First Gain In Weeks

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Crude oil prices are set to close with a weekly gain for the first time in several weeks. A combination of geopolitical tensions and economic developments contributed to the move higher. The week began with a fairly steep sell-off after OPEC officially announced over the weekend that it would ramp up production in June by 400,000 barrels per day—nearly double what was initially agreed upon. At this pace, OPEC could return to pre-cut production levels by the end of November 2025, a full year ahead of schedule.  However, after a day of digestion, the market stabilized when shale producers in the U.S. announced immediate production cuts. Unlike in the past—when cutting production in the Permian Basin led to economic strain—today’s higher drilling costs and lower crude prices are leading Permian producers to prioritize margin over volume. Many companies are now content to pump less if they can maintain profitability through the downturn.

Tensions in the Middle East also fueled bullish sentiment. Trump announced a ceasefire agreement with the Houthis in Yemen, but no vessels have yet moved through the Red Sea due to lingering distrust. Meanwhile, Israel continued bombing Gaza and confirmed plans to fully occupy the region. In a major geopolitical surprise, India responded to a May 25 terrorist attack from Pakistan by striking six Pakistani cities. Pakistan retaliated by shooting down Indian fighter jets with both drones and its own aircraft. The escalation caught global attention, especially as Pakistan used Chinese-made jets and India used French-made ones. The episode raised alarms over China’s growing advancements in military aviation.

Sanctions remained in place against Iran, Venezuela, and Russia. The UK issued new sanctions against a Russian oligarch operating a fleet of 100 shadow vessels transporting crude oil to China. While the U.S., UK, and EU continue to ramp up pressure, oil flows from these sanctioned nations have persisted.

Trade tensions took a more optimistic turn this week. The U.S. and UK finalized a deal on Thursday—though the impact is more symbolic since the U.S. already runs a trade surplus with the UK. The bigger negotiations are yet to come. Both the U.S. and China have announced a willingness to lower tariffs in an effort to reach a deal, with talks set to begin this weekend in Switzerland. The announcement followed news that China experienced its largest drop in exports to the U.S. in April. In response, China continues to roll out monetary easing policies to maintain positive economic growth. India also said it is open to reducing tariffs to secure a deal with the U.S. I believe we’ll see a flurry of trade agreements being completed in the months ahead.

The EIA reported a crude inventory draw this week, driven mostly by gasoline production from US refiners in preparation for summer demand. Diesel inventories remain below the five-year average, but refiners are showing new discipline. They’ve signaled a willingness to limit output in order to maintain profitability, rather than chasing market share by selling gasoline and diesel at low profitability or a loss. That discipline is helping to create price stability across the refined product spectrum.

In local markets, diesel prices bottomed out in the Chicago spot market earlier this week before rebounding quickly to close out the week. I expect to see retail diesel prices move higher next week as a result. Gasoline prices continue to hold steady. Demand for gasoline hasn’t surged yet, and the Chicago market remains well-supplied. Diesel inventory remains somewhat tight, but conditions are improving and not currently affecting prices.

Propane prices also appear to have bottomed this week. Futures pricing saw some upward momentum as expectations for strong propane exports from the U.S. increase into the second half of 2025 and throughout 2026. Midwest propane inventories remain below the 10-year average, and we’ll need to build storage through the end of September to stay on track. If crude oil prices remain in the $60/barrel range, we should be able to close the gap and reach the five-year average by fall. I strongly recommend topping off your tank by the end of August and locking in propane contracts for the upcoming heating season. We’ll be releasing next year’s contract prices within the next two weeks—stay tuned.

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

Global Crude Oil Price War Brewing?

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Happy Friday!

This week brought a more tempered level of volatility in the crude oil markets compared to prior weeks, but there was still no shortage of impactful news. The biggest driver of crude oil prices continues to be the evolving trade relationship between the United States and China, along with economic data released from both countries.  China reported stronger-than-expected GDP growth for Q1 of 2025, showing a 5.4% year-over-year increase. On the surface, this appeared to be a bullish signal for oil demand, especially considering China’s status as one of the world’s largest crude importers. However, the story beneath the headline was less encouraging. Many analysts attributed the growth to a temporary “pre-tariff” export rush. Ongoing deflationary pressure, weak domestic consumption, and a shaky property sector still threaten China’s ability to sustain growth through the rest of the year.  In contrast, the U.S. economy contracted by 0.3% in Q1, marking the first quarterly decline since 2022. The contraction was largely driven by a surge in imports ahead of anticipated tariffs, combined with slowing consumer spending and government cutbacks. Although one quarter of negative GDP growth does not technically define a recession, many economists raised red flags. The IMF pegged the probability of a U.S. recession at 40%, and J.P. Morgan raised their call to 60%.

However, things shifted slightly on May 2 when China’s Ministry of Commerce publicly acknowledged that they are assessing proposals from the U.S. to reopen trade talks. This was the first recognition from China that negotiations might be on the table since the latest escalation in tariffs. According to officials, the U.S. has expressed interest in dialogue, and China is evaluating the sincerity of these efforts. But Beijing also made it clear: the U.S. must first remove unilateral tariff hikes before any formal talks can begin. The statement was seen as an olive branch, but it came with conditions. While the path forward is uncertain, this is the most constructive tone we’ve heard in weeks.

In terms of supply-side news, crude oil prices were under pressure this week due to a 3.76 million barrel build in U.S. crude inventories. OPEC+ signaled that they may move to increase production again in June. Saudi Arabia specifically indicated that they are comfortable with lower prices and may support a faster pace of output increases. That comment caused a quick drop in oil prices as some traders began to price in the possibility of a price war. OPEC+ will meet next week, so we should have more clarity then.  Then, in a surprise geopolitical turn, President Trump announced on May 1 that secondary sanctions would be applied to any country or company purchasing Iranian crude or petrochemical products. The threat sent crude oil prices sharply higher mid-week. The market’s concern is that this could disrupt a significant portion of Iranian crude going to China, which remains Iran’s top customer. Traders reacted quickly, and the spike reminded everyone how sensitive the energy markets remain to any shifts in foreign policy or geopolitical risk.

In local markets, the CME spot market moved slightly lower along with crude oil. Gasoline and diesel supplies remain tight across much of the Midwest. Although refinery maintenance is starting to wind down, the supply chain is still trying to rebalance. I don’t expect much movement at the pump next week. If anything, we could see a small drop in retail prices as supply stabilizes.

Propane prices in the spot market also moved a bit lower this week. However, the forward curve has remained steady. Midwest inventories are still running below the five-year average, and if U.S. oil companies slow drilling to defend price, propane price could begin to decouple from crude oil. On top of that, lower inventories in the Midwest could increase our dependence on Canadian imports. And with trade tensions still brewing, the threat of tariffs on Canadian propane remains real. If tariffs are imposed, we could see a major price increase later this year. Right now, the current retail price of propane holds good value. Although we could see a small dip, I don’t expect a dramatic drop unless WTI crude drops below $55/barrel. Heating contracts for next season will be available soon. I recommend topping off your tank in the next few months and locking in some propane fixed-price gallons for next winter, especially with ongoing uncertainty around trade with Canada.

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

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