Diesel tops $5.60 as distillate stocks fall to lowest August level since 1951
On-road diesel is in the high $5.60s this week, and crude is not the reason. Brent is in the $80s and WTI is at $81.83, but crack spreads have run above $100 a barrel against a normal $15 to $25. That gap is a refining cost, and it shows up in what jobbers pay per load.
The supply side backs it up. Distillate stocks are on track for the thinnest August inventory reading since 1951; measured as an end-of-month level across all months, the EIA's weekly report puts that as the lowest since April 2005. Refinery outages and the Russia-Ukraine war are both pulling supply offline, and neither clears on its own.
For carriers and fleets, that means fuel surcharges could stay high. Aaron Decker at FreightWaves frames it as a refining capacity crunch driven by tight refining, and the crack spread bears him out. If refiners stay stretched and distillate keeps drawing, diesel could hold in this range or firm.
Crude and Hormuz
Crude fell for a fourth straight day. Qatar's prime minister, Sheikh Mohammed bin Abdulrahman al-Thani, is traveling to Tehran to discuss reopening the Strait of Hormuz, and the market read that as easing. Prices slipped even after a report of a strike on a tanker in the strait, which tells you how much weight buyers are putting on the diplomacy.
Nothing about the visit was made public beyond the statement. Crude could ease further if the strait reopens cleanly, and it could snap back if the talks stall or the tanker strikes keep coming.
Russian refinery hits
A drone strike halted processing at Russia's fourth-largest refinery, with smoke reported over the Ufa plant. Ukraine's campaign against Russian refineries has already triggered a second wave of gasoline shortages inside Russia. The strikes take refining offline, which tightens diesel and gasoline supply in an already thin global market. For US buyers, it is one more reason distillate stays scarce.
Propane record
US propane inventories climbed to a second straight record, with Gulf Coast and Midwest stocks making up about 92% of the weekly build. If the pace holds, total stocks could approach 119 MMbbl by early October. Heading into heating season with that cushion is the one comfortable number in the report.
What to watch
Whether distillate stocks post another draw in next week's EIA data. Watch the crack spread for another close above $100, and see what comes out of the Qatar-Iran talks on Hormuz. Alberta Premier Danielle Smith, meanwhile, has ruled out an export tax on crude to the US, so that supply line stays open for now.