U.S. Gasoline and Distillate Markets: Production and InventoriesThe U.S. gasoline and distillate fuel markets are seeing diverging trends, with production rising while inventories decline. According to the latest EIA Weekly Petroleum Status Report , gasoline production increased to 9.3 million barrels per day (bpd), slightly above last week’s level. However, despite this rise, total gasoline inventories fell by 3.0 million barrels, bringing them 1% below the five-year seasonal average.
Distillate fuel oil production, which includes diesel and heating oil, dropped to 4.5 million bpd, reflecting lower refinery output. While inventories of distillates showed a marginal increase of 100,000 barrels, they remain 11% below the five-year average, signaling a tighter supply environment.
Rising Demand and Seasonal Effects
Total products supplied, a proxy for demand, averaged 20.3 million bpd over the past four weeks—2.8% higher year-over-year. Within this, motor gasoline demand stood at 8.3 million bpd, up 0.9% from last year, while distillate fuel demand surged by 13.6% year-over-year, indicating strong industrial and transportation fuel usage.
With the winter heating season still in effect and freight transportation activity remaining robust, diesel prices may see upward pressure, especially if refinery output does not keep pace with demand.
Price Trends and Market Outlook
• The national average gasoline price increased to $3.128 per gallon, up $0.046 from last week but $0.064 lower than a year ago.
• The national average diesel price edged up slightly to $3.665 per gallon, though it remains $0.444 below year-ago levels.
• The New York Harbor spot price for conventional gasoline rose to $2.181 per gallon, while No. 2 heating oil increased to $2.381 per gallon.
Given the combination of tight distillate inventories and increased demand, diesel prices may continue to trend higher in the coming weeks. Meanwhile, gasoline prices could see moderate volatility, influenced by refinery utilization rates, crude oil price movements, and seasonal demand shifts.
Investment Considerations
For traders and investors, key factors to watch include:
• Refinery utilization rates, which stood at 85% last week, impacting refined product supply.
• Crude oil price movements, as WTI recently dropped to $71.32 per barrel, affecting refining margins.
• Demand trends, particularly in the transportation and industrial sectors, which influence fuel consumption patterns.
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