Prices Remain In A Perilous Position On The Charts

Diesel futures are trying to bounce after reaching a 15-month low Tuesday, but are finding their gasoline and crude oil counterparts to be reluctant participants in a recovery rally so far.

Cash diesel prices in the NYH and San Francisco spot markets both reached their lowest levels since December 2021 yesterday, while most other regions are within a few pennies of their lowest prices of the past 2.5 years. Prices remain in a perilous position on the charts, so if this morning’s bounce can’t be sustained, there’s a growing argument that we could soon see cash gasoline and diesel prices make a run at the $2 mark.

Reports that a potential cease fire in Gaza still had major hurdles to overcome seemed to temper some of the selling Tuesday, while US officials are suggesting that Iran is holding off on a retaliatory strike to give negotiators more time to cut a deal. Houthi rebels meanwhile aren’t waiting for anyone with reports of another tanker ship being attacked multiple times this morning, which caused it to lose power, but not report any casualties.

Refined products saw inventory declines last week according to the API’s latest estimate, with gasoline stocks down around 1 million barrels and diesel down 2.25 million barrels. Crude oil stocks saw a small increase on the week. The EIA’s weekly report is due out at its normal time of 9:30 central today.

An EIA note this morning highlighted how increased efficiency and new pipeline capacity are both allowing the output of crude and natural gas in the Permian basin to continue growing, despite a large reduction in active rigs over the past couple of years.