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Diesel futures continue to oscillate on both technical and fundamental influences. We had mentioned to many, don't be surprised if the March contract touches the support level of $2.65 area when in it was trading above $3.25 in late January. Low and behold on Monday it bounced off $2.6649 before jumping another $.20 over the next two sessions.
Diesel Futures have risen just over $.25 in the last week, for largely the same reason as they tanked the week before. China is now lifting most Covid restrictions, as traders now see demand picking up on the world basket. Even though we are still seeing huge weekly swings, the overall temperature of Distillates looks to be cooling off since trading some $.75 higher than presently mid summer (see below).
Extreme volatility continues grip the futures markets as the USLD pit erased almost $.30 in the last two days. Even though its up about $.05 currently, expect this sell off to continue for the short term.
If you were to read the news, it is almost impossible to tell which way the Oil markets are going as the volatility has all pits in wild daily swings. Fortunately for most of us, diesel prices have corrected over $.30 in the last three days and all but erased the early August climb.
In the last 6 sessions we have seen ULSD futures slide just over $.50 in value. While this is good news, the previous 6 sessions added just about the same amount. So basically we are back to the same levels we were mid-August where we all felt pretty positive pricing was moving in the right direction. Much of the rise can be attributed to money being put into the market as an inflation hedge as rates continue to rise, though it is tough to keep that money in long term with the ever present backwardation.
The last three sessions have seen .4373 get peeled off the ULSD front month contract, with massive intraday swings. Yesterday at the open, APR22 ULSD fell almost .25 before rallying back to finish down only .0673.
Oil prices are continuing to slide back down some after multiyear highs last week. (At time of writing at 10 this morning, both refined products are trending down)
Weak economic data from the United States & China, combined with higher OPEC outputs and rising COVID cases have again raised concerns about oversupply and weakening demand and pushed markets into sell off territory.
EIA Inventory report showed much larger draws across the board on all products than anticipated. By the official count, Crude drew down 4.1mmb (2.9 expected), distillates 3.1mmb (435K expected) and gasoline 2.25mmb (916K expected).
WTI Crude traded & settled below $50/bbl earlier this week, as prices continued to slide across commodities. Today, however, we saw the trend reversing, with the market up this morning by almost 3%. (Early on, we were up over the 3% mark but gains dropped off slightly after the EIA inventory reports were released this morning.)