Energy markets remain firm as global supply concerns continue to support crude oil and refined product prices. Ongoing conflict in the Middle East, disruptions around major shipping routes, and continued attacks on energy infrastructure have kept a risk premium in the market. The Strait of Hormuz and Red Sea remain key areas to watch because both are important routes for moving crude oil and refined products around the world.
Diesel is still the product carrying the most concern for gas and diesel customers. Global diesel supplies are expected to stay tight because of limited spare refining capacity, reduced Russian product exports, lower inventories, and stronger seasonal demand heading into winter. U.S. refineries are already running hard, which leaves limited room to quickly rebuild stocks if demand increases or supply is disrupted.
Several refinery and export disruptions are also adding support to the market. Planned maintenance at Irving Oil’s St. John refinery could tighten East Coast supply during a period when heating and harvest-related demand typically increases. At the same time, Ukrainian drone activity affecting Russian refining and export facilities is creating additional uncertainty for global fuel availability.
Crude oil prices have also been supported by lower global inventories and higher geopolitical risk. Forecasts from the EIA and other market sources point to stronger crude values as Middle Eastern production and exports remain below normal levels. While gasoline has not shown the same level of strength as diesel, it can still move higher if crude oil continues to climb or refinery issues tighten product supply.
Market Outlook
The near-term outlook remains firm, especially for diesel. Tight supplies, limited refinery cushion, stronger seasonal demand, and ongoing global supply risks could keep diesel prices supported. Gasoline may see less direct pressure than diesel, but higher crude oil prices could still limit downside. Customers should be prepared for continued price swings, especially if shipping routes remain disrupted or additional refinery or export infrastructure is affected. At this point, diesel appears to carry the greater upside risk, while gasoline will likely follow the broader direction of crude oil.
If you have any questions or would like current pricing, please contact your Energy Account Manager.
PROPANE
Propane inventories came in stronger than expected this week, with stocks building by 3.1 million barrels and pushing total U.S. propane inventories above 110 million barrels. That was well above the earlier estimate for a 920,000-barrel build and also above the five-year average build of about 1.7 million barrels for this time of year.
Last week’s report showed an unexpected draw of more than 2 million barrels, which was tied largely to a temporary increase in domestic demand and slower summer storage filling. This week’s larger build appears to be a balancing move after that surprise draw, helping inventories recover quickly as the market moves closer to the winter demand season.
Weather remains an important factor to watch. With attention turning toward possible El Niño impacts this winter, propane demand could shift depending on how temperatures develop across key heating regions. For now, the strong inventory position gives the market a more comfortable supply cushion than it had after last week’s draw.
Market Outlook
With inventories now above 110 million barrels, supply looks well positioned heading into the fall. This should help ease near-term concerns after last week’s unexpected draw. However, winter weather will still be the key driver to watch. If colder conditions develop, propane demand could increase and tighten the market. If winter demand remains moderate, the current inventory cushion may help keep the market more stable.
If you have any questions or would like current pricing, please contact your Energy Account Manager.
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