Diesel Supply Alert – October 25, 2022

[Goldhedge]

Supply Alert – October 25, 2022​

October 25, 2022 Alan Apthorp

East Coast fuel markets are facing diesel supply constraints due to market economics and tight inventories.

Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast. These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges.

Back in May 2022, diesel prices rose by $1/gal and supply dried up throughout the Southeast. Over the past few weeks, market volatility has begun to echo the challenges seen in April 2022, as we covered in FUELSNews on Oct 11 and Oct 14. Like before, markets are now seeing extremely high prices in the Northeast along with supply outages along the Southeast.

In many areas, actual fuel prices are currently 30-80 cents higher than the posted market average, because supply is tight. Usually the “low rack” posters can sell many loads of fuel before running out of supply; now, they only have one or two loads. That means fuel suppliers have to pull from higher cost options, at a time when low-high spreads are much wider than normal. At times, carriers are having to visit multiple terminals to find supply, which delays deliveries and strains local trucking capacity.

Because conditions are rapidly devolving and market economics are changing significantly each day, Mansfield is moving to Alert Level 4 to address market volatility. Mansfield is also moving the Southeast to Code Red, requesting 72 hour notice for deliveries when possible to ensure fuel and freight can be secured at economical levels.

Supply Alert - October 25, 2022 - Mansfield Energy Corp

East Coast fuel markets are facing diesel supply constraints due to market economics and tight inventories. Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast. These have been occurring...

mansfield.energy

 

[Goldhedge]

 

[smooth]

Biden: I'm gonna destroy the fossil fuel industry
Also Biden: I'll tax the shit out of you if you dont make more

You dont just increase refining capacity you fucking idiot.....
Why would any fuel/energy producer invest in increasing production while under this hostile administration?

 

[russell.cabbage]

The MIC are digging a huge hole in the US, one even they won't be able to dig themselves out of...

 

[cheka]

diesel is short because the refiners are making heating oil for the yanks? i think that cut goes into jet, diesel, kerosene, or heating oil - so have to choose

same yanks that routinely block natgas pipelines to replace their heating oil dependence. globalist warming for the win

 

[pmbug]

Diesel Prices Have Jumped. What’s Responsible for the Increase?

TLDR; the current high diesel prices are fundamentally the result of demand outpacing supply, as of the posting of this blog.

www.afpm.org

More:

Diesel

www.afpm.org

 

[cheka]

need to look at the volume being shipped internationally too that was a big volume money maker when i was working in the biz a few years ago. the terminal downstream of ours was constantly loading diesel ships for overseas ports

 

[pmbug]

...
Ok, so the PADD 1 distillates situation is concerning, at least from the perspective of diesel and heating oil consumers there. But how did things go awry? After all, utilization rates for U.S. refineries ... suggests refiners are already doing all they can to maximize production. ...
...
As for distillate imports, they’ve been sagging. Imported volumes to PADD 1 have been unimpressive for most of 2022 (red line in Figure 4), and in recent weeks they’ve been surfing the bottom of the 5-year range. A few factors could be at play here, but one that stands out to us is the pull of distillates to Europe — for some obvious reasons. For one, Russia had been a leading distillates supplier to Europe before Ukraine was invaded. Since then, flows of Russian diesel to the continent have been declining, and a European ban on imported Russian distillate is set to be implemented in February 2023. For another, with natural gas at a premium there, European power producers able to switch their plants from natural gas to diesel have been stockpiling distillate. All this also means that the occasional shipments of diesel that PADD 1 would typically receive from Europe in past years won’t be happening for the foreseeable future. In addition, the closure of the Come-by-Chance refinery in Eastern Canada in 2020 reduced the amount of diesel available for import from Canada, the primary supplier of imported diesel to the East Coast.

There’s another market influencer out there too, namely the impact of IMO 2020, the International Maritime Organization (IMO) mandate that most ocean-going ships powered by fuel oil (the most common bunker fuel) use products containing less than 0.5% sulfur by weight, a significant reduction from the previous specification of 3.5% sulfur by weight. Our understanding is IMO 2020 has resulted in about 700 Mb/d of global middle distillate supplies going to bunker, putting a further squeeze on supply. We should note that these additional barrels in the bunker pool aren’t always captured in official statistics (EIA, BP Stats review, etc.) because the final fuel is still sold as bunker, even though it contains more distillate than old-school ship fuel.
...

Why - What's Throwing the Distillates Market Out of Whack?

The U.S. market for distillates has been crazy the past few months — especially in PADD 1 — and given all that’s going on, it’s likely to stay that way for months to come.

rbnenergy.com

 

[cheka]

great find pmbug. this quote nails it down imo. it also confirms that our shortages are self inflicted (again). i dont know who is winning russia vs ukraine. but i know who is losing - the people that live in US, europe, etc

Russia had been a leading distillates supplier to Europe before Ukraine was invaded. Since then, flows of Russian diesel to the continent have been declining, and a European ban on imported Russian distillate is set to be implemented in February 2023

 

[searcher]

Column: U.S. rush for renewable diesel may ignite fresh food fight

American trucking firms and airlines are on course to consume more renewable diesel than biodiesel for the first time in 2022, marking a significant milestone not just for the domestic fuel sector but also for global edible oil markets.

www.reuters.com

 

[gringott]

Thank the Lord I can still walk.

 

[searcher]

Column: U.S. Diesel Shortage Starts to Ease​

November 26, 2022 EnergyNow Media

Column: U.S. Diesel Shortage Starts to Ease - Energy News for the United States Oil & Gas Industry | EnergyNow.com

LONDON, Nov 24 (Reuters) - U.S. stocks of road diesel and heating oil show early signs of stabilising and even increasing slightly as exceptionally high prices encourage production, discourage exports and possibly suppress consumption. Distillate fuel oil inventories increased by 3 million...

energynow.com