Per the EIA, diesel production fell by 135 Mb/d, while demand surged by over 1 MMb/d, leading to a reduction in inventories by 3.2 MMbbl across the U.S. last week. As a result, diesel prices rose by 7.2%, expanding the diesel crack spread by 11.8% to $18.17/bbl, marking its highest level since December 1st. This price support in the diesel market can be attributed to tight inventory levels and robust demand, which may continue to influence the market.
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Where Did Our Distillate Go? Stocks Low as Heating Oil Season Arrives
U.S. inventories of distillate — especially ultra-low-sulfur diesel (ULSD) and heating oil — are at their lowest pre-winter level in three years after falling during the summer months for the first time since inventory records started being measured in 1982. Rising diesel exports are one culprit; another is the shutdown of a number of Gulf Coast refineries during and immediately after Hurricane Harvey. The good news is that distillate prices have been increasing, as have the margins for refining crude oil into distillate — both encouraging refineries to ramp up their diesel/heating oil production. Today, we look at recent developments in the distillate market and what they may mean for diesel and heating oil prices this winter.
- Analyst Insight
Diesel Price Spread Vs. Crude Oil Highest in a Year
The price spread of U.S. Gulf Coast diesel over crude oil (MEH WTI Houston) has surged over the past four weeks.
