The daily ebb and flow of positive and negative data continues to keep future distillate pricing in the $.20 range since early May. Although we are on the high side of the range, current inventory and demand data might indicate a slight retreat in the days to come.
Crude saw a large increase with the weekly inventory report, gas and distillates were also up 1% and 2% respectively. Coupled with the FEDs non action on interest rates, we saw gains from Tuesday cut in half by Wednesday afternoon. While economic data appears to be stabilizing, the FED did make sure to note that 2 more rounds of rate hikes are “not off the table”. Demand still appears to be the unicorn nobody is able to catch. After last weeks bump in demand, Distillates showed a sharp 6.3% drop over last week and down over 1% over last year. Moreover, most are still looking at China’s rebuilding process with those figures not much clearer. The reopening is robust, but nowhere near what it needs to be to get them back to pre-pandemic levels. Many key banks have now cut their year end target prices for Crude and products thus keeping any large gains in check.
What does this mean for you? Short term, I would expect to maintain this range as speculative money doesn’t appear to be flowing into the market. Refilling SPR contracts have begun to be sold, China and US demand is waning and Saudi’s just cant help themselves from producing product. I talk with many of you throughout the week, feel free to reach out with specific questions or we are always willing to meet.