Farm Fuels in Focus: Fuels Unchanged

• April 2017 natural gas opened today at $2.81 -- up 22 cents from our last Fuels in Focus.
• Farm Diesel is unchanged on the week at an average of $2.02 per gallon.
• April 2017 WTI crude oil opened the day at $52.58 -- down $1.33 from our last report.
• April 2017 Heating oil futures opened the day at $1.57 -- down 3 cents from our last report.
• Propane is unchanged at an average of $1.36 per gallon regionally.

Farm Diesel -- Farm diesel was unchanged this week. Michigan added 3 cents per gallon and Iowa added a penny. Ohio fell 6 cents and Minnesota softened a penny. All other states were unchanged.

We are content at 75% filled for spring farm diesel. Of course, the crude oil market is no more certain than it has been in previous months, but it does appear that OPEC’s plan to cut production is at least limiting producer output. The increase in crude futures prices has inspired more U.S. production to come back online which will keep a lid on crude futures as stockpiles will not fall as quickly as OPEC planned. Meanwhile, we end this week with a softer opening on heating oil futures. We expect rangebound, sideways price action in both heating oil and crude and as home heating season comes to an end, distillate supplies will rebuild, limiting price strength for distillates.

That being said, with spring fieldwork fast approaching through the bulk for the Midwest, demand for diesel will place a hard floor under prices. We are presently unsure if that will offset seasonal distillate price softness, and our expectation if for farm diesel to firm slightly near-term, but remain fairly steady until some major event roils petroleum markets.

• Distillate inventories reported by EIA fell 0.9 million barrels to 164.2 mmbbl. Stocks are currently 0.6 mmbbl above the same time last year.
• The regionwide low currently lies at $1.92 in Wisconsin and the Midwest high is at $2.30 in Missouri.

Propane -- Propane was also unchanged this week. Kansas and North Dakota each firmed 3 cents per gallon as Michigan fell 3 cents and Iowa softened a penny per gallon. Eight of the twelve states in our survey were unchanged.

Propane is set to soften seasonally, but weather hiccups along the way will add short-term price strength. For now, I would advise propane users book home heat hand-to-mouth unless you need a huge amount. We are at the time of year when prices will begin to soften on its way to the summertime price low, when we will book aggressively for winter 2017-18.

Stocks reported by EIA continue to lag the prior year at this time which has added some price strength. Expect supplies to build seasonally as warmer weather takes hold and prices to respond lower.

• According to EIA, last week, national propane inventories softened 0.536 million barrels -- now 13.758 million barrels below the same time last year at 49.307 million barrels.
• The regionwide low is at $1.09 per gallon in South Dakota and the regionwide high is in Kansas at $1.65.