Recommendation: Do NOT forward price diesel, gasoline or propane for at least two to three months. Crude oil prices will decline $15 to $20 soon.
If you want the reasons, read on:
We all know diesel, gasoline and propane are refined from crude oil.
Think of refineries as you think of the big meat packing companies. If packers cut production hours or slow the chain speed, less hogs and cattle get killed, the livestock gets backed-up on the farm, resulting in reduced prices for the livestock growers, but on the other side of the packers is the demand for meat. Less slaughter means less meat; less meat means higher beef and pork prices.
Oil production is rapidly expanding. More wells are being drilled every week. More capped wells are being opened every week. The demand for sand to frack oil shale has sand being mined, loaded and shipped 24/7.
Meanwhile, refinery work has slowed and that has caused tight fuel supplies and higher prices with gasoline and diesel fuel higher than ever before. Energy consultant Turner, Mason & Co. said the U.S. refining capacity has fallen by 1.0 million barrels per day (bpd), or about 5% since the beginning of the pandemic. Global refining capacity has shrunk by 2.13 million bpd. U.S. heating oil and diesel fuel supplies were at a 17-year low the week of May 6th.