Diesel Stocks Are Expected to Fall Below 100 Million Barrels. Check Your Fuel Clauses

The useful part

Record nominal pump prices and a shrinking inventory cushion are colliding with fuel contracts that were priced for a calmer market. The EIA now expects distillate inventories, diesel and heating oil, to drop below 100 million barrels this month and stay below the five-year low through most of 2027. Stocks fell below the five-year range back in April, and by the week ending August 28, they sat at 104.2 million barrels, 14 percent under the five-year average for that time of year.

How it works

• EIA data show refinery utilization at 98 percent for the week ending August 28, about as high as it gets, with distillate production running around 5.1 million barrels a day.
• Every barrel that leaves the Gulf Coast for a buyer abroad is a barrel that never shows up in our domestic stockpile, no matter how hard U.S.
• Pump prices have made the point more bluntly than any inventory chart could.
• EIA's own survey had the national average at $6.529 a gallon by September 21.
• If your fleet, your drilling rigs, or your frac crews run on diesel, this isn't a headline you can skip past.

What to take from it

net exports of distillate have run at or near five-year highs almost every month since February, because refiners overseas haven't been able to match last year's output. Tanker traffic through the Strait of Hormuz is still disrupted, alternative routes are seeing less use, and drone attacks on Saudi Arabia's East-West Pipeline this month forced a precautionary shutdown of...

Example or evidence

Details worth keeping

Why the Cushion Disappeared It's not for lack of trying at the refinery. The rest of the story is overseas, and it's ugly.