London October 7 2022: Diesel supplies are so tight heading into winter that profits for producing the heating and trucking fuel are nearing a record high.
The diesel crack spread, a measure of refining profits, touched $77.32 Friday, just shy of the all-time intraday high hit in June. The supply shortage is also evident in the prompt spread — the difference between the two nearest futures contracts — which is at the widest level since May.
While the hefty diesel crack is good for refiners, it doesn’t bode well for consumers, who could see the cost of goods and services rise along with the price of fuel for trucking. It’s also a problem for households especially in the Northeast that rely on diesel for heating in the winter. Supplies of the fuel are at the lowest seasonal level on record and aren’t refilling at the rate they should be during this time of year.
“Flat now is actually a mega draw” heading into winter, said Amrita Sen, director of research and co-founder of London consultancy Energy Aspects Ltd. She added that the supply situation is compounded by refinery outages in the US and Europe.
Several US refineries are down for seasonal maintenance, limiting fuel production. Others, such as BP’s Toledo refinery in Ohio, have halted output due to fires or other accidents. Compounding matters, ongoing strikes at French refineries are crimping global diesel supplies, sending the price of the fuel in Europe soaring.
