Market Speaks: US EIA States Strong Demand For Ultra-low Sulfur Diesel Results In Lower Inventories

11 Nov 2022 , 12:44 PM

The US EIA stated yesterday that strong demand for ultra-low sulfur diesel (ULSD) in October, combined with reduced global production, has resulted in lower ULSD inventories in the United States. ULSD is the most widely consumed form of distillate fuel oil. Current inventories and current estimate of future demand can be combined into a metric called days of supply, which is calculated by dividing the inventory (in barrels) by the estimated demand (in barrels per day) to get the number of days that inventories alone could meet demand. In October 2022, the United States had 25 days of supply of distillate, the fewest since 2008. The US days of supply between 2017 and 2021 averaged 34 days. U.S. inventories of distillate fuel oil have been below the previous five-year (2017–21) low since the start of 2022. In October 2022, the New York Harbor spot price for ULSD averaged $4.36 per gallon (gal), the highest monthly price since May 2022. The increase in diesel prices, both in the United States and globally, has been the result of a number of factors, such as tight global inventories, reduced refinery production in Europe following labor strikes, and the start of seasonal demand for distillate as a home heating fuel.Powered by Commodity Insights