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ULSD Crack at 10yrs Low as Supply Builds, Demand Weakens
5/28 4:47 PM
ULSD Crack at 10yrs Low as Supply Builds, Demand Weakens CRANBURY, N.J. (DTN) -- The ULSD crack spread with the domestic barrel as the cost component dropped to the weakest refinery margin since March 2010 as distillate fuel inventory expanded for an eighth consecutive week as demand continued to wane. At a 164.3 million bbl 39-month high, distillate fuel inventory is a staggering 39.5 million bbl or 31.7% above year ago, and 23.4% above the five-year average. Distillate stocks have increased at a quicker pace as refiners pushed jet fuel feedstock into the distillate pool because of light air travel, however demand for the middle of the barrel continues to trend down amid a weak economy. Distillate fuel supplied to the U.S. market moved below the five-year average in mid-March coinciding with the start of the government lockdown, where it has remained through May 22, data from the Energy Information Administration shows. EIA reported a 3.266 million bpd implied demand rate for the week-ended May 22, down 402,000 bbl from the previous week and 1.016 million bpd or 23.7% below year ago. For the most recent four-week period, implied distillate demand averaged 3.47 million bpd, down 545,000 bpd or 13.6% against year ago. Jet fuel supplied to market increased 226,000 bpd to 860,000 bpd last week, although down 1.165 million bpd or 57.5% against year ago. Cumulatively in 2020 through May 22, EIA shows jet fuel supplied to market at 1.201 million bpd, down 522,000 bpd or 30.3% against year ago. The ULSD crack with West Texas Intermediate futures, ULSD futures minus WTI futures, plunged $2.85 to $5.17 bbl, while down $6.73 or 56.6% in May. Using the Brent futures contract, the ULSD spread sunk $2.49 on the session and $1.88 in May to $3.59 bbl, a nearly 11-year low. Brian L. Milne, 1.402.255.8020, brian.milne@dtn.com, www.dtn.com. (c) Copyright 2020 DTN, LLC. All rights reserved.