Recall last summer when the news cycles were reporting the US had “less than 30 days supply of diesel”! Well, expect to hear that again soon as finished diesel inventories now sit at roughly 26 days of supply, where the unofficial warning level is about 30 days. Reality check… that is if everything stopped today, we would have 26 days…. truth is refineries are running at 90% capacity with the vast majority of finished and unfinished products being exported.
Oh, also expect commentary on massive Quarterly earnings from big oil companies. Still futures remain elevated in a market dominated by Iranian headlines, but my senses tell me that it has started to not take the bait on peace talks until concrete plans are approved.
Ships are trickling through the Straits of Hormuz, but again if the full opening happened today you’re looking at about 3 months until world levels balance out. Does that mean that futures will drop the $1.50 overnight? Not likely, but we could see it over a month or two. With the backwardation in pricing, keep an eye out for opportunities farther out.
As always, we are here to assist with any questions or to bounce some ideas around.