ULSD: Cooling Off in the Comfort Zone of the Mid $2.60’s

After testing the limits of the top half of the range on Monday, ULSD cooled off the last three days by about $.10 to fall into the comfort zone of the mid $2.60’s.  The $.20 range we have discussed between $2.60 and $2.80 remains intact with little earthshattering news to push us out either way.  That, or we have just become immune to what was once earthshattering.  The FED is maintaining rates at current levels with acknowledging it is time to pull back slowly over the next few months, signaling at three small cuts to come.  Weekly swings in inventory and demand figures have added support to the wavering mentality.  On a yearly basis, demand for gas is still down by 1.7% and Diesel is off about 3%, even with a 12% jump last week.  Trucking remains mired in a recession as latest figures show tonnage down 1.5% .  One would assume this would push futures down.  Unfortunately, on the world stage, things are slightly more bullish.  Ukraine’s drone strikes of strategic Russian refineries have taken roughly 600m Barrels Per Day out of their system.   The majority of these barrels fed the internal or domestic needs of Russia, not exports.  Interesting tactic. Russia will now have to shift export refineries to suit the needs of its own people, therefore opening other nations to satisfy the world basket.  That, coupled with what we mentioned last week, a report published that the current shipping woes around the Red Sea is adding over 100mbpd to demand.  Still cautiously optimistic we fall below the $2.60 level before the tulips pop.

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