Stronger Natural Gas Prices Seem to be Aiding in the Relative Strength for Diesel Prices

Diesel prices are trying to lead the energy complex higher with gains around 1% in the early going while RBOB and WTI are up around ½ of a percent.

Stronger natural gas prices seem to be aiding in the relative strength for diesel prices as the potential for material levels fuel switching between nat gas and diesel becomes a reality for the first time since 2022. US Henry Hub prices were trading near a 2 year high this week reaching $4/MMBTU overnight before pulling back this morning.

In addition to colder weather stretching across large parts of the US, concerns about what will happen in Europe when the deal to ship Russian natural gas via Ukraine ends in a week also looms large over the global natural gas market. US prices also seem to be benefitting from the startup of another LNG export facility that allows more domestic production to make it to the international market where it’s worth 2-3 times as much as if it stays at home.

Much has been written recently about China’s economic slowdown and its impact on global fuel demand. Meanwhile, the country has also been experiencing a boom in EV sales, with a new report suggesting more than half of all cars sold in 2025 expected to be electric, which is also weighing heavily on gasoline demand.

Marathon reported 3 upsets in the past 3 days in the Carson section of its LA-area refining complex. In addition, Chevron reported more flaring at its El Segundo facility on 12/24 which could be a sign of units being restarted that had been undergoing unplanned repairs over the prior week.