Black Sea Tensions: Ukraine and Russia's tensions in the Black Sea heightened. Ukraine marked specific Russian ports as military targets after recent altercations. A Ukrainian drone struck a Russian military ship and a commercial oil freighter. Six Russian Black Sea ports now face a military target designation. Russia's Novorossiysk port facility resumed operations after a naval drone attack, which temporarily halted traffic.
Crude Oil & Refined Fuels: Crude oil prices trended upwards due to production cuts by Saudi Arabia and Russia. Saudi extended its 1 MMbpd cut, while Russia's cut was less than in previous months, seeming more opportunistic than strategic. OPEC+’s July production was down by over 1 MMbpd.
Gasoline & Diesel: Diesel prices rose modestly, while gasoline declined. The shift is attributed to the US surpassing peak gasoline demand and refineries choosing cheaper crude blends producing more gasoline.
US Strategic Petroleum Reserve (SPR): Biden's administration retracted its offer to buy 6 MMbbl of crude for the SPR. Historically, the SPR has been a tool to manage US gasoline prices, suggesting refilling might occur only at lower WTI crude oil prices.
Inventory Data: The US saw a record 17 MMbbl drop in crude stock. Conversely, Singapore stocks added 2.1 MMbbl.
Propane: Despite an inventory build, propane prices gained. MB and Conway prices both rose, maintaining a consistent percentage of crude.
Recommendation: With escalating Black Sea tensions and rising crude oil prices due to production cuts, the energy market shows potential volatility. Farmers might consider locking in fuel prices for the upcoming Fall harvest to hedge against future increases. Contact our Certified Energy Specialist, Shane McCully, at 608-504-6281 to contract your fuel today.
