Trump weighs diesel export ban as diesel hits a record $6.53 and gasoline stocks fall to a 12-year low
Diesel is the story this week, and it is a problem for anyone who hauls or sells it. President Trump is still weighing a ban on US diesel exports to pull down pump prices before the November 3 midterms, and he hasn't ruled it out. Diesel has already hit a record $6.53. If a ban lands, it would keep barrels home and could ease the retail number, but it would also strand Gulf Coast refiners who sell a big share of their distillate abroad. Trump said himself that a ban could have "a negative impact on gasoline," so the tradeoff is real and he knows it.
The pressure is going international. Washington has told France and Germany to draw down their emergency diesel stocks or face the export ban anyway, with one European source saying the US asked the EU to release 120 million barrels over six months. The US supplied about half the EU's diesel imports in August. For a US jobber, the read is simple: supply is tight enough that the administration is leaning on allies before it touches its own exporters, and either outcome keeps distillate volatile into the harvest and heating season.
Gasoline stocks and the crack spread
The supply side is just as thin on the gasoline barrel. EIA's report for the week ended September 25 put US motor gasoline stocks at just above 204 million barrels, down 1.7 million on the week and the lowest since November 2014. The 3-2-1 crack spread hit an all-time high in the same stretch. Refiners are making unusually good money turning crude into product right now, which tells you the shortage is in the finished fuel, not the crude. Lean inventories heading into fall mean less cushion if a refinery stumbles, and basis could stay jumpy at the rack.
China's export halt and crude
China's refiners have halted fuel exports until further notice, with PetroChina canceling some October gasoline and jet cargoes, according to Reuters sources. Less Chinese product on the water tightens the global fuel market, and that flows back to US distillate and jet pricing even though the barrels never touch a US terminal.
Crude went the other way. Brent fell to about $97 from over $103 the day before, and WTI is near $89.57. The drop followed reports from banks and shipping-data firms that Persian Gulf oil flows have returned close to pre-war levels. Cheaper crude with record crack spreads is the squeeze: your feedstock eased, but the product you buy didn't follow it down.
State tax moves
Several states are cutting at the pump to blunt the pain. Indiana extended its gas tax holiday, Ohio's cut begins this weekend, and the Michigan Senate could vote on its own proposal. Indiana's governor also granted temporary off-road diesel relief for farmers during harvest after 52 lawmakers asked for it. These change the street price in those markets, so check your tax tables before you set retail.
What to watch
Whether Trump pulls the trigger on a diesel export ban, and whether Europe releases the 120 million barrels to head it off. Watch next week's EIA stocks for any gasoline build, and watch whether China's halt starts showing up in Gulf Coast distillate demand.