Kemp, Energy News, ET EnergyWorld

Opinion: US diesel shortage shows economy hitting capacity limit: Kemp

LONDON: US distillate fuel oil inventories are depleting to critically low levels; either an imminent recession reduces consumption or prices are likely to surge higher.

Distillate fuel oil is the lifeblood of the industry and the worsening shortage shows that the economy is hitting hard capacity constraints in the short term.

Stocks of diesel, heating oil and other distillate fuel oils fell by more than 2 million barrels to 109 million barrels last week, according to data from the US Energy Information Administration (EIA).

Distillate inventories have declined in 66 of the last 109 weeks by a total of 65 million barrels since the beginning of July 2020 (“Weekly petroleum status report”, EIA, Aug. 3).

The drawdown has more than offset the 45 million barrels accumulated in the second quarter of 2020 when consumption was hit by the first wave of the coronavirus and widespread lockdowns.

Stocks are now in only the 8th percentile for all weeks since 2000, down from the 68th percentile at this point last year and a record at the end of July 2020.

Inventories are more than 21 million barrels below the corresponding point in 2008, when prices were just coming off a record high, and at the lowest level for the time of year since 1996.


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