Energy Market Updates

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Winter Diesel

Crude Inventory Build Overshadows Finished Product Decline

The large Crude inventory build yesterday overshadowed the decline in finished products and took the floor out of pricing yesterday.  Crude increased over 12 million barrels, largely due to the limited refinery activity in the past weeks.  Refineries are running at about 80% capacity due to maintenance, cold, and limited demand forecasts.  Fundamentals have pushed aside the risk premium in the last few days.  The Global conflict premium had shot diesel pricing up almost $.40 since the first of the year.  With distillate demand down about 10% compared to the same time last year, it makes refiners walk a tightrope on producing even with margins very high on distillates, in the $41 per barrel range currently.

As we all look towards not seeing anymore snow, Taylor Swift at football games, and cold temps, its important to know we are not done yet.  The next two weeks are often times when we get that arctic blast over a weekend making for a difficult Monday if you moved to a standard diesel too early.  Stay the course with your winterizing, DKB continues to stock and deliver winterized diesels.   Look for pricing to find its way back down over the next few weeks in much the same pattern we saw from September to January and hopefully we fall back another $.25 from here.

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Navigating Stability Amidst Global Tensions & Winter Dynamics

The trend to lower lows every 15 days or so appears to have subsided.  Does this mean the market has found a comfort level for the next few weeks?  My sense is that most are still weighing the Global Demand vs Mid East Risk Premium battle that we mentioned last week.  Global tensions continue to be elevated as Houthis strikes have reached vessels in the Red Sea, Pakistan has now struck Iranian targets and the war of words between all nations ramps ups.  The strike first, speak later motto is what has most on edge.  With Inventories set to be released this morning, a day later due to the Holiday, a careful eye will be not just on stocks, but demand, specifically in the distillate sector.   While the middle of the Country saw a cold snap  last week, here in the Northeast we are starting to get towards more seasonable temperatures.  Again, stay the course with Diesel Winterization programs. 

Sideways market movements are often the most difficult to deal with.   While they do bring some stability to overall costs, the day to day gyrations can leave us scratching our heads.  It is important to be in close contact with your supplier and Rep to be aware of what happens throughout the day.  More so in the winter as sometimes future market movements do not translate to local physical markets. Schedule a Meeting

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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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