Farm Fuels in Focus: Bearish Fundamentals Pressure Diesel

December 17, 2015 03:43 PM

 

  • LP is 1 cent higher on the week at $1.04 per gallon.
  • January 2015 natural gas opened today at $1.82 -- down 24 cents from our last Fuels in Focus.
  • Farm Diesel is 10 cents lower on the week at an average of $1.86 per gallon.
  • January 2016 WTI crude oil opened the day at $35.80 -- $1.47 below our last report.
  • January 2015 Heating oil futures opened the day at $1.12 -- 12 cents lower than our last report.

12172015DieselFarm Diesel -- Diesel prices continue to erode with no end in sight to the downtrend. We expect to see prices level off soon, but crude oil has consistently dragged diesel below our expectations, and ahead of schedule. Until we see clear signs of a low in place, book farm diesel hand-to-mouth. Heating oil futures are even less bullish than crude futures. Jan heating oil futures have quickly violated every line of support dating back to before the 2008 highs. Near-term support lies on a daily chart at $1.08, but the extremely bearish chart picture currently presented in Jan heating oil futures has us scratching our heads. Where the bottom appears and what will add that key support are unknown and may be up to something as unpredictable as a black swan event.

  • Distillate inventories reported by EIA firmed 2.6 million barrels to 152.0 mmbbl. Stocks are currently 30.4 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.54 in Missouri and the Midwest high is at $2.06 in Wisconsin.
Farm Diesel 12/17/15
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.89
$1.87
Unchanged
$1.87
Iowa
Illinois
$2.15
$2.02
Unchanged
$2.02
Illinois
Indiana
$2.22
$2.25
-23 cents
$2.02
Indiana
Wisconsin
$2.18
$2.14
-8 cents
$2.06
Wisconsin
Minnesota
$2.01
$1.95
-3 cents
$1.92
Minnesota
South Dakota
$1.98
$1.88
-4 cents
$1.84
South Dakota
North Dakota
$1.98
$1.98
-8 cents
$1.90
North Dakota
Nebraska
$1.83
$1.83
Unchanged
$1.83
Nebraska
Missouri
$1.83
$1.83
-29 cents
$1.54
Missouri
Kansas
$1.86
$1.81
Unchanged
$1.81
Kansas
Ohio
$2.04
$2.04
-35 cents
$1.69
Ohio
Michigan
$1.98
$1.87
-7 cents
$1.80
Michigan
Midwest Average
$2.00
$1.96
-10 cents
$1.86
Midwest Average

12172015LP

Propane -- Very little change on the propane side. We are 1 cent higher this week to $1.04 per gallon regionally. Since heating oil futures are so bearish, we may see propane follow that trend and dip back below $1.00 per gallon, but export activity will likely be a supportive factor. Warmer temperatures of course have taken a bite out of demand and consumption, leaving many with plenty of propane for what remains of the winter. If it actually turns out anybody needs to refill next summer, prices now appear to be set to come in lower than the June/July 2015 seasonal low.

  • According to EIA, last week, national propane inventories fell 1.683 million barrels -- now 20.587 million barrels above the same time last year at 98.975 million barrels.
  • The regionwide low is at $0.88 per gallon in Nebraska and the regionwide high is in Indiana at $1.39.
LP 12/17/15
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.00
$0.98
-1 cent
$0.97
Iowa
Illinois
$1.26
$1.29
Unchanged
$1.29
Illinois
Indiana
$1.21
$1.32
7 cents
$1.39
Indiana
Wisconsin
$1.18
$1.18
Unchanged
$1.18
Wisconsin
Minnesota
$1.01
$1.01
-1 cent
$1.00
Minnesota
South Dakota
$0.89
$0.89
Unchanged
$0.89
South Dakota
North Dakota
$0.93
$0.93
Unchanged
$0.93
North Dakota
Nebraska
$0.87
$0.87
1 cent
$0.88
Nebraska
Missouri
$1.14
$1.14
2 cents
$1.16
Missouri
Kansas
$0.92
$0.92
Unchanged
$0.92
Kansas
Ohio
$0.89
$0.89
Unchanged
$0.89
Ohio
Michigan
$0.83
$0.96
Unchanged
$0.96
Michigan
Midwest Average
$1.01
$1.03
1 cent
$1.04
Midwest Average

 

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