Farm Fuels in Focus: Diesel Continues Lower

December 10, 2015 12:45 PM

 

  • LP is 2 cents higher on the week at $1.03 per gallon.
  • January 2015 natural gas opened today at $2.06 -- down 17 cents from our last Fuels in Focus.
  • Farm Diesel is 4 cents lower on the week at an average of $1.96 per gallon.
  • January 2016 WTI crude oil opened the day at $37.27 -- $4.46 below our last report.
  • January 2015 Heating oil futures opened the day at $1.24 -- 12 cents lower than our last report.

12132015DieselFarm Diesel -- Farm diesel prices continued lower on the week. EIA's Short-term Energy Outlook (click here to read our brief summary) revised gasoline prices lower which implies lower diesel as well. Lower crude oil prices will continue to incentivize production at refineries. Fall temperatures have been mild enough that distillate inventories have increased significantly. That too will lever for limited farm diesel price strength.

Our heating oil/farm diesel spread opened this week at 0.62, well above levels that would indicate diesel price strength. But as the week has gone on, heating oil futures have softened. As of midday Thursday, the spread has widened to 0.74 which indicates a bearish tone near-term.

Since OPEC did not lower their production forecast at Friday's meeting, global crude oil supplies will remain high, and world oil prices, including WTI will be limited.

We still look for farm diesel to bottom around Christmas although in recent months, diesel has outrun our downside expectations with little difficulty.

  • Distillate inventories reported by EIA firmed 5.0 million barrels to 149.4 mmbbl. Stocks are currently 27.7 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.81 in Kansas and the Midwest high is at $2.25 in Indiana.
Farm Diesel 12/10/15
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.93
$1.89
-2 cents
$1.87
Iowa
Illinois
$2.15
$2.15
-13 cents
$2.02
Illinois
Indiana
$2.22
$2.22
3 cents
$2.25
Indiana
Wisconsin
$2.23
$2.18
-4 cents
$2.14
Wisconsin
Minnesota
$2.02
$2.01
-6 cents
$1.95
Minnesota
South Dakota
$1.98
$1.98
-10 cents
$1.88
South Dakota
North Dakota
$1.98
$1.98
Unchanged
$1.98
North Dakota
Nebraska
$1.81
$1.83
Unchanged
$1.83
Nebraska
Missouri
$1.83
$1.83
Unchanged
$1.83
Missouri
Kansas
$1.87
$1.86
-5 cents
$1.81
Kansas
Ohio
$2.04
$2.04
Unchanged
$2.04
Ohio
Michigan
$1.98
$1.98
-11 cents
$1.87
Michigan
Midwest Average
$2.00
$2.00
-4 cents
$1.96
Midwest Average

12132015PROPANE

Propane -- Very little change on the propane side. We are 2 cents higher this week to $1.03 per gallon regionally. Michigan and Indiana led to the upside but the majority of states were unchanged. As we have said, the weather will add support to prices as the mercury drops, but record U.S. supplies will limit upside risk.

  • According to EIA, last week, national propane inventories fell 3.445 million barrels -- now 21.499 million barrels above the same time last year at 100.658 million barrels.
  • The regionwide low is at $0.83 per gallon in Michigan and the regionwide high is in Indiana at $1.32.
LP 12/10/15
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.00
$1.00
-2 cents
$0.98
Iowa
Illinois
$1.26
$1.26
3 cents
$1.29
Illinois
Indiana
$1.21
$1.21
11 cents
$1.32
Indiana
Wisconsin
$1.18
$1.18
Unchanged
$1.18
Wisconsin
Minnesota
$0.99
$1.01
Unchanged
$1.01
Minnesota
South Dakota
$0.89
$0.89
Unchanged
$0.89
South Dakota
North Dakota
$0.93
$0.93
Unchanged
$0.93
North Dakota
Nebraska
$0.80
$0.87
Unchanged
$0.87
Nebraska
Missouri
$1.14
$1.14
Unchanged
$1.14
Missouri
Kansas
$0.94
$0.92
Unchanged
$0.92
Kansas
Ohio
$0.89
$0.89
Unchanged
$0.89
Ohio
Michigan
$0.83
$0.83
13 cents
$0.96
Michigan
Midwest Average
$1.01
$1.01
2 cents
$1.03
Midwest Average

 

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