Goldman Sachs, J.P. Morgan, and Morgan Stanley raised their year-end crude forecast to ninety dollars a barrel, and the propane fill at the co-op on Main Street went with them. Sara signs the bills at our house. She asked me last month why the October fill cost more than the July fill when nothing about the house had changed. Nothing about the house had changed. The crude number changed.
The Journal compiled the survey; the numbers are the banks’. The same three houses now see fourth-quarter Brent averaging $90.22 and West Texas Intermediate at $85.47 — up from the $78.92 and $74.62 they were publishing not long ago. For the full year, Brent averages $88.13 and WTI $82.98. And by the first quarter of 2027, the same analysts expect Brent to “fall” to $83.44 and WTI to $79.88. Fall. That is the bear case out of three of the largest commodities trading desks on the planet.
Here is what the survey leaves out. On Wednesday, Brent November futures were at $103.45. The more-active December contract was at $98.61. Front-month WTI was at $91.10. The market is not trading toward the banks’ ninety-dollar average. It is trading ten dollars past it. A number that comes in below where the market already is is not a forecast. It is a lagging indicator with a letterhead.
And the physical supply picture is loosening, not tightening. Saudi Arabia has put its East-West pipeline back into service after repairing drone damage. Middle East crude exports excluding Iran are back at prewar levels, per the data provider Kpler — a point we flagged earlier this week. Chinese buyers are running down the stockpiles they accumulated before the conflict instead of bidding on the spot market. Goldman itself says the bigger upside risk to crude is not Chinese buying; it is a renewed escalation hitting Middle East production and export infrastructure. Read that again. The demand story will not carry the forecast. Only another strike will.
Daniel Yergin’s The Prize walks through a century of fights over who controls the flow out of the Gulf. The chokepoint is real; it has always been real. What matters in Adams County is that the chokepoint is not here. We are at the far end of the chain, and the far end pays the premium whether the oil moves or not.
Here is how the number gets here. Crude is priced in a trading room. The diesel that runs the county highway department’s graders and plows is priced off a Chicago rack. Between the trading room and the co-op sit the crude price, then the Chicago basis, then freight, then Wisconsin’s excise, then the dealer’s margin. Nobody at the farm-supply co-op sits down and reads the Goldman Sachs note. But the rack price the dealer pays when he orders next month’s inventory is set upstream by people who do. He is not guessing what oil will cost in November. He is ordering off what Goldman, J.P. Morgan, and Morgan Stanley say oil will cost in November — and when all three of them say ninety dollars, he prices inventory at ninety dollars, and the ticket on the section-line road comes down with the same number on it.
That is the mechanism. The forecast is not a report about the price. For the person ordering the fuel, it is part of the price.
Three places in this county feel it before any headline does. The county highway shop fills its graders, its plows, and its fuel trucks before the snow flies, and that winter budget is set in the fall against prices the banks are now forecasting to ninety dollars — sand and salt on the roads in January is a crude-oil decision made in October. Every dairy hauling milk out to the plant and buying hay in from Marquette County pays the premium twice: once in the diesel in the truck and once in the diesel in the hay hauler’s truck, which he passes along because he has to. And the neighbor filling an LP tank for winter is buying ninety-dollar crude through two middlemen and a war in the Gulf that has not ended and is not about to.
Russia is expected to extend its diesel-export restrictions for another month. A U.S. diesel-export ban is hanging over the trade as an open question. Tighter physical supply meets inflation pressure meets an election year, and the only direction for distillate cracks is up. The “stalled ceasefire” line is doing the same work it has done since the war started: Iran talks stalled, the Strait of Hormuz uncertain, a diesel ban still on the table. Each one is a reason the forecast can stay bullish after the physical market has stopped justifying it.
The banks in this survey are not neutral observers. Goldman Sachs, J.P. Morgan, and Morgan Stanley run commodities trading desks. They trade the crude they are forecasting. I am not claiming they are lying; I am describing what they are, which is the same thing. When a house that trades oil publishes a bullish oil forecast, the forecast is also a position, and the note to clients who already own that position is also marketing. It does not matter what any individual trader believes. The structure does not care what the trader believes.
I burn it too. The Silverado runs on gasoline. The brush hog, the snowmobile, and the loader run on gasoline or diesel, and when the pump moves, my season moves with it. There is no side of this in which I am the customer and they are not. The difference is that they set the number and I pay it.
What would actually protect this county is not a bumper sticker and it is not a hearing in Madison. Our electric co-op has bought power on long-term contracts for decades, because a contract is what you use when the price in front of you is volatile and you are not the party setting it. There is no reason the county highway department and the farm-supply co-op cannot buy fuel the same way — contracted, fixed, ahead of the winter, before the next survey moves the rack price.
I keep a notebook on the shelf by the bench with twelve years of ice-out dates in it, because the lake takes no position about what I want it to do. The rack price does not either. The dealer’s truck will be back up the road in November, and the ticket will carry whatever number Goldman, J.P. Morgan, and Morgan Stanley have published by then.