Analysis Paralysis

The run up in futures pricing since June sure seems like a mountain (see graph).  As the song says, “It’s hard to move mountains when you’re paralyzed”.   Distillates are currently $.75 higher than early June, and $.20 higher than the correction of early October.  The market appears to be paralyzed by overseas conflicts rather than home soil fundamentals.  Yesterdays inventory report showed a build in Crude, flat on gas and a slight dip in distillates.  This should have had all three indexes fall.  Specifically if take into account the Demand data showing gasoline is down about 2% and distillates are down 4% to last week and a whopping 14% to last year.   Somewhat of a surprise to see diesel futures the only one of the three show gains yesterday.  While the FED kept rates unchanged, some are speculating this could bring some upside potential in the coming weeks, but to me, the demand numbers don’t support this.  OPEC output is expected to be in line with quotas for October, no big shift expected.  Analysis Paralysis, maybe. The song also says, “you gotta try”.   For you, the steep backwardation continues to show opportunities of value in Q2 and Q3 of 2024.  The outer months appear to show the true value of diesel pricing.  Its not too early to be thinking about budget numbers or job costs starting next spring, we can help you do that. As always, do not hesitate to reach out or Schedule a Call.

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