Farm Fuels in Focus: Diesel Prices Retreat

November 17, 2015 11:52 AM

 

  • LP is up a penny on the week to $1.05 per gallon.
  • December 2015 natural gas opened today at $2.33 -- up 8 cents from our last Fuels in Focus.
  • Farm Diesel is 5 cents lower on the week at an average of $2.07 per gallon.
  • December 2015 WTI crude oil opened the day at $41.03 -- $5.08 below our last report.
  • December 2015 Heating oil futures opened the day at $1.39 -- 11 cents lower than our last report.

11172015FarmDieselFarm Diesel -- We have reached the halfway point of seasonal refinery maintenance but roughly 1.4 million barrels per day in refining capacity remains off-line. The result has been a decline in refined petroleum product stocks and a rise in U.S. crude oil supplies. According to EIA, crude oil stocks have increased for the past six consecutive weeks as distillate stocks have shown seven consecutive weeks of declines. That has contributed to both lower crude prices and higher diesel prices. Once refinery capacity is fully restored, we expect crude oil to firm slightly and diesel prices to retreat.

We have already seen some of the higher regional prices come back down. This week, Missouri farm diesel fell 17 cents per gallon and Ohio fell 39 cents. Indiana and Michigan each fell a nickel. We expect farm diesel to fall back to $2.00 per gallon regionally by mid-December.

In its November Short-term Energy Outlook, EIA projected crude oil production slightly lower in 2016 and for the national average gasoline price to fall to $2.06 in December. The outlook for fuels including farm diesel is short-term bearish with sideways action to follow through the winter. We recommend pre-booking a portion of your farm diesel needs for spring delivery at the December low but right now, we will wait for refinery maintenance to end, and for distillate stocks to increase, pressuring prices.

  • Distillate inventories reported by EIA firmed 0.4 million barrels to 141.1 mmbbl. Stocks are currently 24.3 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.84 in Missouri and the Midwest high is at $2.39 in Michigan.
Farm Diesel 11/17/15
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.96
$1.90
4 cents
$1.94
Iowa
Illinois
$2.12
$2.15
Unchanged
$2.15
Illinois
Indiana
$2.36
$2.35
-5 cents
$2.30
Indiana
Wisconsin
$2.18
$2.33
Unchanged
$2.33
Wisconsin
Minnesota
$2.12
$2.08
-2 cents
$2.06
Minnesota
South Dakota
$1.95
$1.96
2 cents
$1.98
South Dakota
North Dakota
$1.97
$1.97
2 cents
$1.99
North Dakota
Nebraska
$1.89
$1.89
-1 cent
$1.88
Nebraska
Missouri
$2.01
$2.01
-15 cents
$1.84
Missouri
Kansas
$1.94
$1.91
Unchanged
$1.91
Kansas
Ohio
$2.43
$2.43
-39 cents
$2.04
Ohio
Michigan
$2.38
$2.44
-5 cents
$2.39
Michigan
Midwest Average
$2.11
$2.12
-5 cents
$2.07
Midwest Average

11172015Propane

Propane -- Propane stocks are still well above last year when the regional average price was $1.64 per gallon. Indiana and Wisconsin each firmed 6 cents this week. Nebraska LP fell 1 cent per gallon and beyond those three states, all other states in our survey were unchanged.

Since the United States has flipped from being a net importer of propane to a net exporter, supplies may fall slightly, but the industry is well prepared to service both domestic and export demand. Warmer fall weather has contributed to national propane supplies and despite the fact that Thanksgiving is right around the corner, propane demand has thus far been very soft.

Our forecast is unchanged. We believe propane will firm slightly seasonally, but sharp increases are not likely thanks to strong stocks. We expect summer prices in 2016 to be slightly above those of summer 2015.

  • According to EIA, last week, national propane inventories firmed 1.563 million barrels -- now 22.921 million barrels above the same time last year at 103.974 million barrels.
  • The regionwide low is at $0.89 per gallon in Ohio, Nebraska & South Dakota and the regionwide high is in Michigan at $1.29.
LP 11/17/15
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$0.97
$1.00
Unchanged
$1.00
Iowa
Illinois
$1.26
$1.26
Unchanged
$1.26
Illinois
Indiana
$1.15
$1.15
6 cents
$1.21
Indiana
Wisconsin
$1.10
$1.12
6 cents
$1.18
Wisconsin
Minnesota
$0.98
$0.97
Unchanged
$0.97
Minnesota
South Dakota
$0.89
$0.89
Unchanged
$0.89
South Dakota
North Dakota
$0.93
$0.93
Unchanged
$0.93
North Dakota
Nebraska
$0.90
$0.90
-1 cent
$0.89
Nebraska
Missouri
$1.14
$1.14
Unchanged
$1.14
Missouri
Kansas
$0.91
$0.91
Unchanged
$0.91
Kansas
Ohio
$0.84
$0.89
Unchanged
$0.89
Ohio
Michigan
$1.28
$1.29
Unchanged
$1.29
Michigan
Midwest Average
$1.02
$1.04
1 cent
$1.05
Midwest Average

 

11172015DieselIndex