Tag Archives: Wyocena

Finally Fell Off The Cliff

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Happy Saturday!

Tensions continue to build overseas. Ukraine and Russia exchanged fire again, resulting in more casualties. Ukraine also signed a deal with France for 100 warplanes as the conflict shows no signs of slowing. Trump floated another proposal to end the war, but it appears dead on arrival since it would require Ukraine to give up land.  Russian oil exports resumed after being temporarily disrupted by Ukraine’s attack earlier this month. In Asia, China is increasing pressure on Taiwan through propaganda at home and heightened naval activity. Taiwan is boosting its own preparations in response to the growing threat of a potential invasion.

Japan and China are also escalating. China is limiting Japanese imports, and both sides have intensified rhetoric over Taiwan. For the first time in 50 years, Japan issued a formal warning about threats from another country, even suspending communication. Still, Japan sent a coalition to China this week in an attempt to calm tensions. Meanwhile, Israel resumed heavy bombing in Gaza and Lebanon, putting the ceasefire in jeopardy. Germany lifted its suspension on arms sales to Israel as the situation intensifies.

The IEA continues to forecast that OPEC will not cut production in 2026, which could create a record surplus of up to 4 million barrels per day. In the near term, 7.7 million barrels of sanctioned Russian crude are trying to reach India before November 21. A sanctioned Russian tanker even made a U-turn near Venezuela after a U.S. warship intercepted nearby raising tensions with Venezuela as well as targeting sanctioned Russian crude.  However, Russia is still finding buyers for its sanctioned oil—roughly 2 percent of global supply. China continues to take some volumes, and Iranian oil is also making its way to China through Indonesia. Chevron and Exxon have also entered the bidding for Russia’s Lukoil’s foreign assets, a move that would significantly expand Chevron or Exxon’s global footprint if completed.

WTI closed below $60 per barrel for the second week in a row. Despite low prices, the Permian Basin remains optimistic, especially with new technologies emerging that could unlock large additional reserves from existing wells.  The latest EIA report showed a draw in U.S. crude inventories, but global refining margins remain strong, easing any concerns about crude shortages. Diesel prices collapsed this week as oversupply finally hit the U.S. market following months of high refining margins on crack spreads. Gasoline also followed crude lower as demand concerns and oversupply weighed on prices.  The Federal Reserve offered little clarity again on whether a December rate cut is coming. Trump is lowering hundreds of tariffs on goods and foods to help cool inflation, and he continues to unwind several sanctions—both actions that could support a stronger dollar, which typically keeps crude cheaper. Fed officials signaled Thursday they are inclined to hold rates steady. October payrolls came in at 119,000 jobs, well above expectations, adding more doubt to the idea of a rate cut next month.

The Chicago spot market is finally running smoothly. All regional refineries are back online and ramping up output. Strong refining economics for diesel have triggered a major selloff in diesel prices, and gasoline has followed crude lower as oversupply builds and demand shows some seasonal jitters.  If crude price holds steady, I expect to see a significant drop in diesel retail prices at the pump over the coming week. However, winter blending with #1 fuel will start adding some additional cost at the pump. Gasoline retail prices should also move lower based on this past week’s crude price activity.

Propane continues to trade sideways, as it has for months. The EIA reported a draw on national propane inventories, and a strong cold snap has pushed through nearly three-quarters of the country, increasing demand. With forecasts still calling for a colder-than-normal winter, I don’t expect retail propane prices to move much in the near term.

If you have any questions or need anything, feel free to reach out.  Thank you and have a great weekend!

Best regards,

Jon Crawford

Bit Of A Pogo Stick This Week

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Happy Friday!

Crude oil prices saw a sharp rebound at the end of the week after Ukraine struck an oil refinery in Russia, knocking out roughly 2% of the world’s supply. The attack pushed prices back toward $60 per barrel after collapsing earlier in the week. Meanwhile, Russia continues its push deeper into Ukraine near the Pokrovsk region. Lukoil’s sale of foreign assets continues to find high demand, and Russia intends to use those funds domestically. Despite the recent export disruptions, Russia is still managing to ramp up refining capacity at home.  Russian oil is still officially hitting the market, even as China and India continue to avoid additional Russian purchases. Hungary was granted a sanctions waiver, which will give Russia an easy outlet for some of its floating storage and continue supporting production levels. At the same time, Europe has seen an uptick in sabotage attempts, cyberattacks, and drone incursions tied to Russia.  And in another development, Venezuela is also gearing up for potential conflict, adding more uncertainty to the geopolitical backdrop.

Prices collapsed midweek as the forward trading curve moved into contango, meaning prices farther out are higher than prompt barrels. That’s a classic oversupply signal, and funds also sold off positions for year-end tax harvesting and booking some gains. Global supply concerns grew after the amount of crude floating on ships hit 1 billion barrels. OPEC members Saudi Arabia, Kuwait, and Iraq also increased shipments to India, and the IEA warned of the potential for a record surplus next year. The combination sent crude prices sharply lower.  There was also news that Trump met with the Syrian president as Syria begins exporting oil again. If those barrels grow, they add yet another layer to the oversupply picture.

Despite all the talk of surplus, ExxonMobil and Chevron continue to ramp up exploration. Both are moving into areas that historically haven’t seen much drilling, such as Greece, and are also considering returning to Libya. Oil companies are betting that demand will continue rising over the long term. Their view is that prices may stay depressed for a year or so, but eventually rebalance and recover. OPEC has already revised its outlook to flat demand instead of rising demand, but the IEA now forecasts oil consumption increasing through 2050, giving producers confidence to keep drilling.  Still, China’s manufacturing and retail sales data remained very weak—some of the worst readings in years—which throws a bit of cold water on long-term demand optimism. However, the U.S. and China agreed to suspend port fees for each other, a sign that some trade tensions may finally be easing. That could eventually support each economy, but traders remain cautious for now.

The EIA’s latest report showed a large build in U.S. crude inventories, reinforcing the idea that surplus supply is on the horizon. Trump also opened additional areas of Alaska for drilling. Even though the government shutdown ended on Thursday—a potentially supportive event—prices still sold off sharply on Wednesday.  The Federal Reserve continues debating whether slowing payroll growth is the result of weaker demand for workers or tightened immigration. Most Fed officials lean toward weaker demand. There is a small amount of support for crude prices based on the Fed potentially holding off on a December rate cut, which keeps the dollar stronger and makes crude cheaper for international buyers. At the same time, there’s growing fear of weaker holiday sales weighing on the economic outlook.

The Chicago spot market has been extremely volatile. Massive price swings continue as refineries come back online and previously closed pipelines reopen. We are hopefully nearing the tail end of one of the biggest supply crunches southern Wisconsin has experienced in years. Gasoline retail prices should hold relatively steady, as gasoline hasn’t been impacted nearly as much as diesel. Diesel retail prices, however, are likely to move higher in the coming week, especially as winter-blended diesel enters the market.

Propane prices continue to trade in a narrow, fairly boring range. Retail prices have moved higher as early winter temperatures have boosted demand. Even so, when comparing BTU value across propane, diesel, and natural gas, propane remains a strong value at current prices. If you are a will-call customer, please check your tank more frequently as we start the winter season—this winter is already running 25 percent colder than last year, and usage can ramp up quickly.  We don’t want you to get caught with your tank running out!  🙂

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

Back Beneath The Floor

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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

Crude Oil Price Continues With Caution

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Happy Friday!

WTI crude oil started the week right where it left off Friday, trading around $61 per barrel. Prices climbed midweek, briefly testing the $65 ceiling, but couldn’t break through and slid back down to $61. Unless there’s a late-week surprise, WTI looks set to close the week almost unchanged — a flat finish after several sharp ups and downs.

Geopolitical risk continues to simmer.  Russia again launched drone strikes on Ukrainian energy infrastructure, forcing rolling power restrictions across the country. In the Middle East, Israel again ramped up attacks in Gaza, saying Hamas continues to violate the ceasefire. These developments added a mild geopolitical bid to crude prices, but traders are still largely in “wait-and-see” mode regarding the current global military conflicts.  Tensions also rose on the nuclear front. Russia tested a new long-range weapon designed to bypass missile defense systems and is reportedly considering deployment in response to sanctions. In turn, President Trump ordered the first U.S. nuclear test program in 33 years to match those of Russia and China. Such escalation could provide a floor under crude oil prices as investors price in higher global risk.

Despite ongoing sanctions, Russian oil exports remain steady, with barrels often held in transit or rerouted to friendly markets. Saudi Arabia continues to coordinate closely with Russia — a balancing act made harder by U.S. and EU restrictions. While Saudi officials warn that sanctions could push the market into deficit, the IEA continues to hold firm on their assessment of an oversupplied market well into next year.  Lukoil officially completed the sale of all its foreign refining assets this week, though domestic operations remain unchanged. Meanwhile, India has stepped in to fill lost Russian diesel exports, blending and re-exporting refined products to global buyers. Iran, trying to stay ahead of potential new sanctions, is offering deeper discounts to China to secure market share — though not enough to undercut Russian barrels outright.  All eyes are on the OPEC+ meeting this weekend. Unless the group surprises with fresh production cuts, analysts warn the market could face an even deeper wave of surplus later this year. Iraq continues to lift output slightly but remains within its official quota after months of overproduction. In a surprise, OPEC+ floated talk of a small output hike in November, which would likely keep a lid on prices.

It was a busy week on the policy front.  The Federal Reserve cut interest rates by another quarter-point, bringing slight relief to credit markets. However, the Fed also signaled that no further cuts are likely in December. The move initially weighed on crude prices as it strengthened the U.S. dollar, making dollar-denominated commodities more expensive for foreign buyers.  On the trade side, both the U.S. and Japan finalized a new trade agreement, and President Trump met with China’s Xi Jinping in Brussels, resulting in another round of tariff reductions. Still, China’s latest manufacturing data showed continued contraction — its slowest in more than six months — highlighting the weakness in industrial demand.  Even though the EIA reported large draws in U.S. crude and refined products this week, prices still moved lower. Much of those draws were tied to export activity, refinery outages in the Midwest, and strong seasonal demand from the U.S. harvest.

The Chicago spot market has been a mess this week. Diesel supply remains tight, especially at the Madison, WI terminal, which sits at the end of the pipeline from Chicago. That pipeline unexpectedly went down for maintenance, keeping diesel spot prices firm even as crude weakened.  Winter-blend diesel is now hitting the market as well, adding to costs. Gasoline prices soared as the Group spot market remains short on supply due to limited operations at a northern refinery. Expect diesel pump prices to stay steady at the pump, while gasoline prices should move higher in the coming days.

Propane continues to bounce along its floor price. Traders seem unwilling to push values much lower, even as crude remains weak. With winter demand beginning and crop drying still active east of the Rockies, propane prices have stayed resilient.  Although inventories posted a small build this week, colder weather could flip sentiment quickly. I believe the floor is set for propane — and any sustained cold snap will likely spark a bullish move.  If you’re a will-call customer, please start watching your tank levels closely. Even if your furnace is only running at night, usage can creep up fast, and we don’t want anyone running out as we head into colder weather.

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

Best regards,

Jon Crawford

Rapid Rise In Price

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Good morning!

Happy Friday!  Oversupply continued to dominate headlines earlier this week, keeping crude prices pinned below $60 per barrel. However, oil is now on pace for a weekly gain after climbing back above that key $60 psychological level late in the week.

The big story came out of the White House, where President Trump imposed deep sanctions on Russian energy giants Lukoil and Rosneft, targeting nearly 500,000 barrels per day of supply. Both India and China have already said they won’t buy from those companies, and Russia responded by conducting nuclear readiness drills—a move that sent crude prices soaring about $3 per barrel midweek.  Ceasefire talks between Ukraine and Russia broke down once again, with Moscow rejecting the latest proposal and intensifying its bombing campaign. In addition, a gas facility in Kazakhstan experienced operational issues, prompting Shell and Chevron to suspend part of their production there. Kazakhstan has been one of the most aggressive OPEC+ members in overproducing, so this cutback could tighten supply and lend some bullish support to the market.  Elsewhere, Iran once again rejected Trump’s offer for peace talks, while Israel launched strikes in Gaza after accusing Hamas of violating the truce. Those developments didn’t move prices much, suggesting traders remain focused on global supply balances rather than Middle East flare-ups for now.

On the economic front, another major headline came from Washington, where the U.S. canceled all trade talks with Canada. The announcement initially pressured oil prices lower, as traders worried about additional crude backing up in the system if the U.S. stops purchasing Canadian barrels. However, after further reflection, markets decided the situation could actually be bullish if Canada is able to find alternative buyers.  The latest EIA report gave the market an extra boost, showing a draw in U.S. crude inventories, which helped extend the late-week rally. Meanwhile, the U.S. inflation rate came in at 3%, reinforcing expectations of an upcoming Federal Reserve rate cut, which would typically lend support to oil prices. At the same time, the ongoing government shutdown is beginning to hit federal paychecks, and that’s starting to weigh on consumer confidence and fuel demand expectations.  Midweek, trade optimism provided another spark as the U.S. and China scheduled new trade talks in Malaysia for Friday. Hopes for a potential deal helped lift crude prices earlier in the week, with traders betting that global demand may hold up better than feared.

Chicago product prices are finally easing after several weeks of volatility. The Whiting refinery is coming back online, helping to stabilize local supply and bring gasoline differentials down from recent highs. Diesel prices, however, have been more resilient due to strong harvest-related demand across the Midwest.  Meanwhile, Phillips 66 and Kinder Morgan are exploring new shipping routes to the West Coast to help fill that region’s refining shortfall. If that plan moves forward, it could divert barrels away from the Midwest and tighten Chicago supply for the foreseeable future.  For now, I expect gasoline prices to drift lower from recent peaks, while diesel remains firm into November.

Propane fundamentals remain soft, but the market is starting to transition into winter economics. Crop-drying demand is active, and colder weather is right around the corner. While inventories remain comfortable, I expect to see price movement by early November as seasonal demand ramps up.  Globally, as more countries ban Russian LPG imports, the U.S. will play a key backstop role in meeting international demand. That could create some upside potential in the export market later this winter.

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

Bears Are Not Ready To Hibernate

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Good morning!

Happy Friday!  Crude oil prices held steady to start the week, supported by geopolitical headlines even as oversupply concerns grow louder. Washington remains locked in a government shutdown, and that uncertainty has weighed on markets broadly.  However, all geopolitical and economic data released this week was bearish and pushed WTI below $60/barrel with a fairly firm ceiling.

President Trump is expected to meet with both Ukrainian President Zelensky and Russian President Putin in the coming weeks.  Zelensky is reportedly asking for more advanced weapons like Tomahawk missiles, while Trump’s follow-up meeting with Putin in Budapest could prove critical for the ongoing ceasefire efforts. In the Middle East, minor flare-ups continue in Gaza, but the ceasefire remains largely intact. So far, it hasn’t been enough to push oil prices one way or another.

On the demand and supply side, the International Energy Agency (IEA) revised its global outlook sharply lower last week, citing a bigger-than-expected supply glut and weaker demand growth. Some agencies are now projecting an oversupply as high as 2.5% next year. The market consensus is that prices near or below $60 per barrel could eventually slow down U.S. shale activity, and the glut may persist through at least the first half of 2026.  OPEC continues to face pressure as members are being audited on their so-called “paper barrels.” The group has trimmed its official demand forecast but still insists that by 2026, demand will once again outpace supply.

Trade developments added another twist. The U.S. has placed new sanctions on certain Chinese crude imports, creating a brief wave of buying as traders positioned ahead of potential disruptions. Meanwhile, in a surprise announcement, China continues to take in as much Canadian crude as possible through its new western export terminal. India is reportedly considering halting Russian crude imports, which could temporarily offer some support though global prices, though history suggests Russia always finds a buyer somewhere.

Domestically, the latest EIA data showed a build in U.S. crude inventories, reinforcing the near-term oversupply narrative. Futures markets have now flipped into contango across the five-year curve—meaning future prices are higher than today’s. That structure encourages storage and near-term buying as traders look to lock in cheaper barrels now in hopes of stronger prices later.  The EIA did release a large draw in distillate inventories reporting that harvest east of the Rockies is in full demand season.

All in all, the market remains caught between potential geopolitical support and fundamental weakness. The wars may keep a floor under prices for now, but with international inventories rising and demand projections slipping, the near-term direction still looks soft for crude oil prices unless something major shifts in the headlines.

Chicago spot prices rocketed higher to end the week after the region’s largest refinery experienced an emergency shutdown. Products were already tight in the neighboring Group market from harvest, and the outage immediately sent gasoline prices up roughly 20 cents per gallon. Diesel prices also moved higher, helped along by strong seasonal demand from harvest. Given these conditions, retail pump prices are likely to move higher in the short term.

Propane prices held narrow as usual even as crop-drying demand picked up across areas east of the Rockies.  The latest EIA report showed a surprise build in propane inventories, but with colder weather approaching, demand should pick up quickly. While the market still leans slightly bearish for now, any sustained crop drying along with a cold snap could spark a sharp, bullish move higher in prices.

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

The Week Of The Trap Door?

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Good morning!

Happy Saturday!  Crude oil prices took quite a swing this week. After holding firm early on, WTI fell below the key $60/barrel level on Friday — a major psychological and technical support point. Once that line broke, prices quickly tumbled to around $58/barrel.  The week began with an escalation in the war in Ukraine. Russian strikes destroyed nearly half of Ukraine’s natural gas infrastructure, forcing the country to rely more heavily on imports. The U.S. still has spare export capacity to meet some of that need. In retaliation, Ukraine hit another Russian oil terminal — this time in Crimea. Meanwhile, Israel launched major strikes on Gaza to mark the anniversary of the October 7th attacks.

While these geopolitical tensions kept crude prices supported early in the week, bearish news gradually took over. President Trump announced progress toward a ceasefire between Hamas and Israel, and by Friday, a deal was officially reached. That ceasefire news stripped away much of the “war premium,” pushing crude decisively below $60/barrel.  Before that headline hit, the tone was already softening due to economic and supply developments. OPEC reported it slightly underproduced last month, and Russia lost roughly one-fifth of its gasoline production capacity due to ongoing strikes. However, these bullish factors were outweighed by new U.S. sanctions on Iran — sanctions that China and India immediately downplayed, stating they will continue purchasing Iranian crude. China has been rapidly building storage capacity, shifting purchases away from Saudi Arabia and toward cheaper Iranian barrels — a move that could accelerate the looming global crude oversupply. Additionally, ExxonMobil announced a deal with Iraq to open a new production facility, adding even more long-term supply pressure.

On the U.S. front, economic data added fuel to the bearish sentiment. The EIA reported another crude inventory build despite higher refinery runs. The Federal Reserve’s September minutes showed officials split 50/50 on total number rate cuts this year. Unemployment claims rose again, and delinquencies on auto loans continue to climb. Meanwhile, the federal government remains shut down, with roughly 750,000 workers now furloughed. Even as President Trump pushes to include healthcare subsidies in a potential deal, negotiations to reopen the government remain at a standstill.

Overall, after starting the week on a bullish note, crude spent the rest of the week under heavy selling pressure. I’ve been calling for sub-$60 crude by year-end — and we hit that level a bit earlier than expected. The key question now is whether this is a sustainable move lower or just the beginning of a short-term “dead cat bounce.”

Here in the Midwest, the Chicago spot market followed NYMEX lower, but gasoline and diesel prices diverged. Gasoline fell more sharply as demand continues to weaken, while diesel held steadier thanks to strong harvest demand. A local refinery remains offline for maintenance, adding pressure to diesel supply. Refiners are also beginning to shift toward #1 diesel for winter, tightening inventories of #2 diesel at terminals. As a result, retail gasoline prices should decline faster than diesel in the coming week.

Propane prices continue to trade in a narrow range. Crop drying season is in full swing, and the EIA reported a large national inventory draw even with above-normal temperatures. The data suggests a higher-than-expected crop drying volume this year. Despite the warm weather, a heavy crop-drying season can quickly chip away at surplus inventories — something we’ll be watching closely in the coming weeks.

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

Floor Not Falling Out Just Yet

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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

Is There A Rocket Ship On A Launch Pad?

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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

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