Global sanctions, diesel inventories and propane prices

As of this writing, energy markets continue to rise with new sanctions being imposed on Iranian and Russian crude exports and the anticipation of tariffs on Canada and Mexico. Big Oil is resistant to “Drill Baby Drill,” due to profit declines in Q4 of last year, putting a hold on capital expenditures. Crude oil spiked in the middle of January ($79/barrel) and has since settled in the $72/barrel range, struggling to break through the resistance of $70/barrel. Diesel fuel has followed crude, only separating with local basis, which continues to be extremely volatile. For reference, in early January, the local diesel basis was $.40 under the New York Mercantile Exchange (NYMEX), the last week of January spiked to only $.12 under the NYMEX, and as of this writing, the diesel basis is currently $.21 under. 

With spring right around the corner, diesel inventories are at a normal range, and prices are .10-.20/gallon cheaper than this time last year. The markets have not given us much opportunity after the fall to fill. If your diesel barrels are not sitting full, call your location or delivery driver and schedule a fill to go into spring fieldwork full. Looking ahead, we hope to have a fall diesel contract available soon. 

Propane prices have fluctuated with demand this winter, recently spiking with wholesalers in a crunch for “wet barrels” for the Northeast United States. Current degree days are 10% ahead of last year and are forecasted to continue to grow. Over the months of April and May, our drivers will be out topping tanks off with unused contracted gallons. 

I would like to thank our member base in its entirety for the continued loyalty and partnership. Innovative Ag Services is continually hard at work fighting for the best price and service that is attainable. 

Have a great spring!