Concerns Mount as U.S. Diesel Inventories Remain Depleted Amid Economic Recovery Hopes
Despite an eight-month downturn in manufacturing and freight activity, US inventories of diesel and other distillate fuel oils have failed to recover significantly. As of July 14, distillate fuel oil inventories amounted to just 118 million barrels, marking a concerning situation. Stocks were 15% below the prior 10-year seasonal average, and the deficit had narrowed only modestly from the previous year. Distillate stocks have seen a slight increase from the previous year's levels, but they remain at the lowest point for this time of year since 2004.
The limited scope for replenishing depleted diesel stocks stems from various factors. US refineries are running at high capacities, making it difficult to shift production from gasoline to diesel. Additionally, US gasoline stocks are also depleted, further constraining the possibility of boosting diesel yields. Moreover, distillate inventories in Europe and Singapore are also experiencing deficits.
U.K. Prime Minister Rishi Sunak has announced a delay in several key emissions-reduction targets, including pushing back the ban on the sale of new gasoline and diesel cars from 2030 to 2035.