Refinery demand softened as net input fell 350Mb/d to 15.39MMb/d, with utilization down to 85.9% and PADD 1 dropping sharply. Gasoline demand surged 420Mb/d, driving a 1.43MMbbl stock draw, while distillate stocks fell as production declined and net exports rose. Weaker margins followed, with WTI crude down, gasoline off 2.8%, and diesel down 3.1%, cutting gasoline and diesel cracks and pushing the 3-2-1 crack spread to $14.69/gal.
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U.S. Crude Stocks Drop as Refineries Ramp Up
Crude stocks dipped, WTI hit a new low, and crack spreads collapsed last week
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Gasoline Demand Surges as Diesel Weakens
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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.
