Diesel Rebounds, Demand Lags, and Drones Hit Refineries

Diesel futures remain on the high side of the summer seasonal range, taking back all of last weeks losses.  Fundamentally, even as demand saw a little bit of a boost this past week, if you strip out exports (implied demand),  we are still well below last years figures.  Gasoline, while slightly more stable, is still soft on a national level.  The inelasticity of gasoline (people need gas to commute daily) tends to be overlooked more than Diesel as it has a direct relationship to the health of the overall economy.  If folks aren’t buying diesel, trucks aren’t running.   

Still the focus of the week has been the President’s complete 180 degree turn on Ukraine.  Now saying they can take back Russian seized land and win the war.  With Ukrainian drones now striking refineries some 900 miles inside Russian boarders, one has to think the tide may be shifting.  That’s like saying if Canada sent drones into Washington DC from Montreal, I sure as hell hope  we would be able to defend that.  Additional comments and chastising towards UN Nations on the need to cut off purchasing energy from Russia, mixing in some climate change hate, has given some the backing they need to stay in the fuel futures market a little longer.  Still the gains have not pushed us out of the seasonal range, meaning we could pullback as more concrete economic factors take hold.  I say this all the time, the market moves quickly.  Having a good relationship with your Fuel Supplier or Rep is critical to understanding what is happening and how that relates to your business.