After 5 days of selling that knocked 11 cents off of prices, gasoline & diesel futures are trying to rally this morning as traders do their best to pretend they didn’t see the brutal demand estimates from the DOE yesterday that led to inventory builds across the board.
US Petroleum demand was estimated to drop by more than 100 million gallons/day (11.6%) last week moving from above the 5 year range to below it in just one data point. Diesel demand led the decline with a 19% drop, while gasoline demand was “only” off 7%. While the post-Memorial day week does typically see a pullback in consumption, it’s usually a fraction of this size, which may say more about the challenges with estimating consumption in the world’s largest economy than it does about actual consumption.
Diesel stocks rose for a 2nd week, but remain below their seasonal 5-year range, and are roughly 23% below where they were this time in the past 2 years. Refiners seem up to the challenge, with diesel output climbing again on the week, and poised to break new records this summer.
PADD 2 refinery runs set another new record last week, and seem to be limited only by access to crude oil in continuing to expand. Reuters makes an interesting note that of all things, it may be wild rice that’s ultimately standing in their way.
US crude oil output reached 10.8 million barrels/day for the first time ever last week, and remains on track to challenge 11 million barrels/day later in the summer.