Exploring the Energy Market
Mar 27, 2023
The energy market is continuing its volatility as we enter 2023. There are no longer days when energy markets would be somewhat predictable with moderate changes. It is not uncommon to see over ten cent changes daily in diesel fuels.
Managing energy risks is more important than ever to the coop and our customers. Customers should take advantage of forward contracting options to limit risk and lock in acceptable margins. Additionally, our AFD (Automatic Fuel Delivery) program enables average daily pricing based on monthly consumption, which minimizes pricing risk and volatility.
Long-term crude and diesel forecasts released by the U.S. Energy Information Administration (EIA) have indicated a softening in crude and diesel pricing. However, as we have experienced over the last couple of years, we are only a significant event away from continued volatility. The most recent significant event was the unforeseen banking collapses which drove crude prices to levels not seen since December 2021.
The EIA has noted that global inventories will increase due to the production of liquid fuels to an average of 102.8M barrels per day in 2024 versus 100M barrels per day in 2022. Ongoing concerns related to the Russian invasion of Ukraine, global economic conditions, and Chinese demand will provide uncertainty in the energy forecasts. The basic economic theory of increased supply and reduced demand equals lower prices will remain to be seen.
Managing energy risks is more important than ever to the coop and our customers. Customers should take advantage of forward contracting options to limit risk and lock in acceptable margins. Additionally, our AFD (Automatic Fuel Delivery) program enables average daily pricing based on monthly consumption, which minimizes pricing risk and volatility.
Long-term crude and diesel forecasts released by the U.S. Energy Information Administration (EIA) have indicated a softening in crude and diesel pricing. However, as we have experienced over the last couple of years, we are only a significant event away from continued volatility. The most recent significant event was the unforeseen banking collapses which drove crude prices to levels not seen since December 2021.
The EIA has noted that global inventories will increase due to the production of liquid fuels to an average of 102.8M barrels per day in 2024 versus 100M barrels per day in 2022. Ongoing concerns related to the Russian invasion of Ukraine, global economic conditions, and Chinese demand will provide uncertainty in the energy forecasts. The basic economic theory of increased supply and reduced demand equals lower prices will remain to be seen.