Farm Fuels in Focus: Diesel Firms on Bullish Crude

Posted on 03/09/2017 10:25 AM

 

  • February 2017 natural gas opened today at $3.30 -- unchanged from our last Fuels in Focus.
  • Farm Diesel is up 6 cents on the week at an average of $2.01 per gallon.
  • March 2017 WTI crude oil opened the day at $52.20 -- down $1.53 from our last report.
  • February 2017 Heating oil futures opened the day at $1.61 -- down 8 cents from our last report.
  • Propane is up 3 cents on the week to an average of $1.19 per gallon regionally.

Farm Diesel -- Farm diesel firmed this week with only Wisconsin unchanged. All other states posted a higher price led by a 12 cent increase in Indiana as Ohio, Nebraska and Missouri all added 9 cents per gallon.

inputsmonitor.com"Bulls maintain the upper hand in the crude oil market as EIA reported an unexpected rise in U.S. crude oil stockpiles. The U.S. rig count is at the highest level in a year and industry watchers suspect any cuts on the part of non-U.S. producers will encourage production increases in the United States. WTI futures ranged between $51 and $55, a level which will bring more rigs back online. In general, traders expect U.S. production to increase through 2017 and remain skeptical that OPEC production cuts will be realized. Even if the cuts agreed to in November are enacted, there is much speculation whether the cuts do enough to dramatically trim the oversupply.

Refinery activity slowed last week which helped boost crude stockpiles on weaker demand, but distillate supplies fell 1 million barrels. Distillate stocks remain above the top end of the five-year average and above the year-ago peg. That along with rangebound crude oil futures will limit upside risk, but winter demand will also keep prices from falling. As we cross above $2.00 per gallon in our regional average farm diesel price, we believe the annual low has already been placed. There will likely be at least one opportunity to increase coverage, but that opportunity will likely carry a 2-handle.

  • Distillate inventories reported by EIA fell 1.0 million barrels to 169.1 mmbbl. Stocks are currently 4.5 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.93 in Ohio & Kansas and the Midwest high is at $2.22 in Indiana.
Farm Diesel 1/20/17
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.91
$1.92
6 cents
$1.98
Iowa
Illinois
$1.94
$2.07
2 cents
$2.09
Illinois
Indiana
$2.10
$2.10
12 cents
$2.22
Indiana
Ohio
$1.89
$1.89
9 cents
$1.93
Ohio
Michigan
$1.97
$2.03
4 cents
$2.04
Michigan
Wisconsin
$1.92
$1.92
Unchanged
$1.98
Wisconsin
Minnesota
$1.93
$1.96
2 cents
$2.07
Minnesota
North Dakota
$1.82
$1.84
6 cents
$2.00
North Dakota
South Dakota
$1.95
$1.95
3 cents
$1.92
South Dakota
Nebraska
$1.84
$1.88
9 cents
$1.90
Nebraska
Kansas
$1.88
$1.88
5 cents
$1.97
Kansas
Missouri
$1.95
$1.95
9 cents
$1.98
Missouri
Midwest Average
$1.93
$1.95
6 cents
$2.01
Midwest Average

 

inputsmonitor.comPropane -- Propane prices firmed on the week. Indiana led gains firming 16 cents per gallon along with Kansas which firmed 11 cents and Nebraska gained 6. As with diesel, no state posted a softer price this week. Propane is priced 22 cents above year-ago and seasonal tendencies will hold LP near that level for the time being.

Still no sign of supply constraints on the propane side, but as the rest of the petroleum sector firmed, propane has followed. As with diesel, we will continue to wait for propane to signal an imperative to book before topping off winter supplies. However, we advised at the September low to book 100% of your needs for winter propane, and your on-farm supplies should last you until late March.

  • According to EIA, last week, national propane inventories softened 7.414 million barrels -- now 17.698 million barrels below the same time last year at 72.245 million barrels.
  • The regionwide low is at $1.09 per gallon in Iowa and the Dakotas and the regionwide high is in Indiana at $1.52.
LP 1/20/17
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.04
$1.05
4 cents
$1.09
Iowa
Illinois
$1.21
$1.21
2 cents
$1.29
Illinois
Indiana
$1.36
$1.36
16 cents
$1.52
Indiana
Ohio
$1.10
$1.10
Unchanged
$1.10
Ohio
Michigan
$1.30
$1.35
Unchanged
$1.35
Michigan
Wisconsin
$1.15
$1.30
Unchanged
$1.30
Wisconsin
Minnesota
$1.09
$1.15
1 cent
$1.16
Minnesota
North Dakota
$1.09
$1.09
Unchanged
$1.09
North Dakota
South Dakota
$1.09
$1.09
Unchanged
$1.09
South Dakota
Nebraska
$1.04
$1.06
6 cents
$1.12
Nebraska
Kansas
$1.34
$1.32
11 cents
$1.43
Kansas
Missouri
$1.15
$1.11
3 cents
$1.18
Missouri
Midwest Average
$1.16
$1.19
4 cents
$1.23
Midwest Average

 

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