Weekly Farm Fuels Bulletin | Fuels Follow Crude Lower

Posted on 11/21/2018 2:17 PM

 

Farm Dieselfartm diesel price chart

  • Farm diesel softened a nickel on the week with no state posting a higher price.
  • WTI Crude oil futures have fallen to around $55 on robust U.S. production.
  • Heating oil futures have softened as well with most contracts trading below key $2.00 as of Wednesday.
  • Lower heating oil futures and pressure on crude oil will pressure retail farm diesel prices. This sets the stage for the dip we have been expecting sometime around Christmas. We will likely advise to lock in some diesel for spring at that time.
  • According to EIA, national distillate stocks fell 100,000 barrels in the week ended Nov. 16. Stocks are currently 5.8 million barrels below the same time last-year and at the low end of the five-year average range.
  • Our farm diesel/ heating oil futures spread indicates near-term downside potential for farm diesel.propane price chart

Propane

  • Propane prices eased 3 cents per gallon on the week. This week's price is just 1 cent above the same week last year.
  • EIA reported national propane stocks fell 1.984 million barrels in the week ended Nov. 16 to 81.776 million barrels, 8.062 million barrels above the same week last year.
  • The sharp rise in natural gas futures has not shown up in propane prices, but there is certainly risk that, since the parabolic upside swing in natural gas was due to forecasts for cold weather, propane will firm as well. However, we believe propane supplies are ample to provide a supply side cushion and minimize upside risk for the time being.

Fuel
11/5/18
11/12/18
Week-over Change
Current Week
Fuel
Farm Diesel
$2.75
$2.75
-5 cents
$2.70
Farm Diesel
LP
$1.42
$1.42
-3 cents
$1.39
LP

Our farm diesel/heating oil futures spread compares the weekly average retail farm diesel price with front-month heating oil futures as of the close on the previous Friday. A move below the "line in the sand" indicates pending upside risk. A move above our "line in the sand" indicates downside potential.

This week, our spread indicates near-term downside potential for retail farm diesel.


farm diesel heating oil spread chart

 

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