Israel vs Iran Price Jumps Fail to Materialize

ULSD NYMEX screen May 2024

If you were one of the ones I spoke with Sunday evening after news of Irans strike on Israel, you knew I was all in that we were headed for new highs.  In what turned out to be a Nothingburger without any Mac Sauce, Israel and their allies basically played space invaders on Iranian drones and missiles.  US aircraft were said to have neutralized over 30% of the weapons alone.  It will be interesting to see how Irans street cred is affected going forward, as we sit now, the market is unwinding a healthy chunk of the threat premium that’s been added in recent months.  ULSD futures now sit below the much talked about support level of $2.60.    

Giving more fuel to the sell off was yesterdays inventory report.  I initially saw it as Bullish with finished products inventories down and demand higher for the first time in weeks.  (distillate demand is still off by about 3% to last year).  Traders instead focused on the Crude inventory doubling expectations along with twice as many exports than last week. 

So far this year, we have danced in this territory only briefly before returning to the comfort zone, as shown below.  The question remains as to if we pull back further to late 2023 levels.  There still are values out there for Q3 & Q4 fixed gallons.  Please don’t hesitate to reach out and discuss.

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