Diesel Demand Remains Strong Despite Higher Prices
April 28, 2022
The DOE inventory report had crude stocks up 691,000 barrels, and Cushing, Okla. crude stocks were up 1.298 million barrels. Total crude stocks are at 414.424 million and last year they were 493.107.
Gasoline stocks were down 1.57 million barrels putting total stocks at 230.805 million barrels and last year there were at 235.074 barrels.
Distillates were down 1.45 million barrels putting total stocks at 107.286 million barrels and last year there were 139.049 million barrels. Inventories are now at their lowest levels since 2008. On market rallies, the diesel gets the most action. But with imports of gasoline down and fewer refineries in the New York Harbor area, gas deliveries there may get tight which could support RBOB gasoline futures prices.
Propane stocks had a big build of 2.195 million barrels putting total stocks at 39.185 million and last year there were 41.001 million barrels. Midwest stocks were up 94,000 barrels putting total stocks at 8.766 million and last year after were 9.828 million. Gulf Coast stocks were up 1.622 million putting total stocks at 24.310 million barrels and last year there were 24.888 million barrels.
The tug of war between supply and demand continues to jockey the market back and forth.
Supply concerns impacted by the war continue to be watched and demand-side traders look at COVID lockdowns, increasing interest rates and recession talk.
Diesel inventories are tight and diesel trading has been very volatile and pushing prices higher to extreme levels. Despite the rapid rise in prices, demand so far has not been drastically impacted. The outlook, for now, is that ULSD remains supported at the front of the forward curve and will continue running higher until demand gets slowed down. With that outlook for ULSD, it will be hard for crude and gas prices to move lower until diesel prices break.