🌎 Global Energy Update — What It Means for the Farm
🛢️ OPEC+ Looks to Pump More Oil
OPEC+ (that’s the group of major oil-producing countries, including allies like Russia) is slowly starting to increase how much oil they pump. They already added more for May and June—and when they meet on June 1, they’ll decide whether to raise production again in July, possibly by 411,000 barrels a day. Longer-term, they’re even talking about adding up to 2.2 million barrels per day by November.
What’s the goal? It looks like they’re trying to grab more global market share, even if it means oil prices take a hit. If they pump too much too fast, there’s a real chance global supply could outpace demand, and that could cause prices to drop.
🇨🇦 Canada Sells More Oil to China Than U.S.
For the first time ever, Canada shipped more oil by sea to China than to the U.S. in April. China got 299,000 barrels per day, while the U.S. received 286,000—a big drop from the 431,000 barrels per day we imported last September.
Why the shift? A few reasons:
- Uncertainty over potential U.S. tariffs on Canadian oil (even though the 10% tariff was eventually dropped).
- Concerns about future trade policies.
- Canada is spreading out its customer base to avoid being too dependent on the U.S.
That said, Canada still sends about 4 million barrels per day to the U.S. through pipelines. And here’s a key point: the price gap between Canadian oil and U.S. oil has narrowed to about $9 a barrel, which is the lowest we’ve seen in over four years. (It was nearly $30 back in November!)
🧾 U.S. Oil Inventory: Bigger Than Expected
The Energy Information Administration (EIA) just released its weekly oil report—and it showed surprising increases in both crude and fuel supplies. Here’s the quick rundown:
- Crude oil: Up 1.3 million barrels, now totaling 443.2 million. Still about 6% below the 5-year average.
- Diesel (distillates): Up 600,000 barrels, but still 16% below average levels.
- Gasoline: Increased 800,000 barrels when a drop was expected.
On top of that, refinery activity is ramping up, now operating at over 90% capacity for the second week in a row. This means the big spring maintenance season is mostly wrapping up.
📉 Market Snapshot
Oil prices are down more than 1% today, largely because of OPEC+ discussing more production increases for July. On top of that, diesel demand in the U.S. dropped to its lowest since early January—likely due to wet weather slowing farm and freight activity.
Even with that dip in demand, diesel futures (ULSD) held steady yesterday and exports are picking up. Right now, diesel is sitting just above $2.10 per gallon, but whether it stays there depends on how these supply and demand trends play out.
💡 WTI Crude Oil Price Trends
- On January 15, crude oil hit a high for the year, settling at $80.04 per barrel.
- Since then, it dropped over $10, hitting lows around $60 in April.
- It bounced back a bit in May to around $64, but is now slipping again as talk of more OPEC+ production picks up.
Right now, that $60 mark seems to be a key support level. If oil prices fall below it again, we could see more pressure on the market.
📞 Need help understanding how this affects your fuel or energy planning? Reach out to your account manager anytime. We’re here to help you make sense of the markets.
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