Not to brag, but I cook a mean steak. Most hate the process, but enjoy the results. It’s takes time and patience to get the perfect medium rare. No quick fixes or shortcuts…. Same can be said about fuel pricing the last 30 days. Even though diesel pricing is down over $.40 since mid September, it has been a real grind getting here. The Israeli – Hamas conflict continues to be the flame keeping front month prices elevated. As concern of this developing into a much larger regional conflict persist. Domestically, fundamentals have kept pricing in check as Inventories have shown a mixed bag, but the real news is in the demand numbers. Gasoline demand is down slightly over last week and last year, while distillate demand was down a whopping 8% to last week, yet up 5% to last year. Trucking tonnage, the blood pressure of the transportation industry and overall economy, was down 4.1% in September over last year. (trucking is ¾ of all transportation modes in the US) this typically signals weaker pricing to follow. Add in that IEA recently published they see peak Oil demand to hit in 2030, vastly different that OPEC’s estimation of 2045.
A lot to digest, the takeaway may be that the summer run up in pricing was largely overdone. Momentum begets momentum and before you know it you are $.50 higher. Again, with the steep backwardation in the market, opportunities still exist in the spring and summer months to firm up pricing. This winter may be tough as tight supplies and volatile daily price swings will rule. Add in, what is expected to be an above average snow season, its important to have the right Supplier in your corner. One that not only has product, but the means to deliver as well.