Energy Market Updates

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Winter Diesel: Understanding Cloud Point, CFPP, & Pour Point

The long term fuel price trend continues to head lower with diesel pricing being almost $.20 lower than a week ago.  There is something in the orange that tells me we are not done. 

Recall, we don’t hit new highs and we touch new lows.  Inventories showed moderate increases for both gasoline and diesel, with demand showing its first increase in weeks.  Some demand uptick can be attributed to the start of the heating season.  That also means the start of winterized diesel fuel.  Not all diesel is the same and it is important to understand the language around winterization to keep your fleet running smoothly.  There are three key terms in talking winter diesel.  Cloud point, CFPP, and pour point.  Cloud Point is the most stringent and conservative temperature at which fuel will initially start to freeze by showing a haze or “cloud” of the wax crystals starting to drop out of the fuel.  Standard diesel has a cloud point of +15 degrees F.  CFPP or (Cold Filter Plugging Point) is the temperature at which the diesel will stop passing through a standard filter.  Additives, which have gained effectiveness over the years, can change the molecular structure of the wax molecules to prevent them from sticking together and allow them to pass through filters.  This temperature is usually significantly lower than a cloud point.  Pour Point, is the temperature when diesel loses its ability to flow.  At this point you aren’t moving.  This temp is often much lower than the CFPP.  So its important to know that if someone says the fuel is a -22F diesel, asking if that is Cloud, CFFP or Pour Point is important.  Securing Q2 pricing has gained some momentum with this recent dip, we are always willing to discuss your specific needs. Schedule a Meeting

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Winter Whirlwinds & Diesel Dips

Another wild day yesterday, and this week, as diesel futures traded in a $.10 range the last two days.  There is something to be said that when you walk into a meeting the market is up $.01 and when you walk out it is down $.08! As the December screen falls off and we look at January, the overall movement still appears to be to the downside.  Again, highs not getting higher and lows getting lower over time.  Inventories showed increases across the board this week with distillates leading the charge with a huge 5.2 million barrel jump.  Demand figures showed drops in both gas and distillates and again diesel down almost 18% compared to last year.  (Although, you wouldn’t know it judging by the endless Fed Ex and Amazon trucks showing up at my door). 

Keeping pricing elevated has been nervousness around what will come out of todays OPEC+ meeting.  Saudi Arabia has been pushing others for more cuts to support pricing as it appears to be tired of doing it alone.  Other members are not too sure if the timing is right at this point.  As you tear your World Famous Dennis K. Burke Calendar to the last page, it’s a stark reminder that winter is here.  Proper winterization of diesel is vital to keeping your fleet running.  We pride ourselves in being specialists in this area and are always willing to lend a voice for your area and what products are available.  We have seen relatively mild temps the last few winters but that doesn’t mean we should be lackadaisical about what’s ahead.  DKB is well supplied with all products to make sure your fleet is operational all season. If you'd like to set up a call or meeting to discuss what makes sense for your company, schedule the best time for you here: Schedule a Meeting

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No Quick Fixes or Shortcuts

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.

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The Market Giveth and the Market Taketh - Winter is Coming

We had a nice $.10 pullback going from Friday to Tuesday, but the market giveth and the market taketh. After another 2.2-million-barrel draw in crude inventories posted this week, the entire complex moved higher even with gas and diesel showing slight increases.  Furthermore, product demand showed down again year over year by about 5%.  A fair amount of talk and politicizing of a looming Government shutdown will have on financial markets and heavily regulated industries like air travel.  All providing support to pricing.  Still, it looks as though we may have topped out in the last few weeks as we move into the winter season. 
I know it's tough to think about winter right now, but it’s coming.  It’s widely agreed that we have moved back into an El Nino weather pattern, which for the Northeast means typically more snow and very cold January and February (good time to get fillports, ladders, and access to tanks colored, cleaned and repaired).   Looking into winter months, some may be challenged on many fronts.  It looks as though security of demand is the key factor in security of supply.  With pricing still sharply backwards, you may find some suppliers not willing to bring in excess gallons or niche product such as Kero, that are not already spoken for.  Have conversations now and be sure you and your supplier are on the same page.  DKB is acutely aware of our customers' needs and as in years past, have your needs first. As always, feel free to reach out. (You can reach out by phone, or schedule a call at a good time for you using this link:  Schedule a Call )
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