Diesel Prices Down 4 Cents So Far This Morning And More Than 10 Cents For The Week

Diesel prices are sliding for a 2nd day, down 4 cents so far this morning and more than 10 cents for the week, wiping out most of Friday’s big rally. Gasoline and Crude oil prices are hovering around the break-even mark, as modest overnight gains have eroded in morning trading. 

Now that cooler temperatures are setting in, fluctuations in natural gas prices seem to be contributing to the daily price movements in Heating Oil (ULSD) Futures once again.  Last week we saw European Natural Gas (TTF) futures soar 40%, which contributed to a big rally in both US Natural Gas (Henry Hub) and ULSD Futures, but a 10% pullback already this week has pulled those values lower.  Europe remains vulnerable to disruption as they continue to iron out the supply wrinkles from their sudden removal of Russian supplies, and Germany has taken the boldly backward step of restarting several coal-fired power plants after taking its nuclear facilities offline just in time for Russia to wield its energy weapon.

Saudi Aramco’s CEO noted that the company has nearly 3 million barrels/day of spare capacity and can increase production within a couple of weeks if it chooses to do so, which seems to be helping calm concerns of an oil market shortage due to escalating violence in the middle east.  That’s a big change from 50 years ago when Saudi Arabia led an oil embargo in retaliation for the US supporting Israel in the Yom Kippur war which caused a 300% increase in oil prices.     

More refinery upsets are being reported as the US moves through the busiest fall turnaround schedule of the past 4 years. Exxon’s Beaumont facility reported multiple units had issues lasting 24 hours at the end of last week and P66 reported a 5-hour upset at its Sweeny TX facility.  Total’s Pt Arthur refinery reported an upset Monday and reports suggest that the Pemex facility in Deer Park TX has taken its largest crude unit offline due to a ruptured line.  As with most upsets along the Gulf Coast this year, the spot market seemed to shrug off all of this news with little change in basis values.

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