Diesel Prices Decrease Amid Sufficient Inventory in the USA

Texas (USA): As per the reports, Diesel inventory levels have risen in the USA as refiners continue to focus on the domestic market. Consequently, Diesel prices in the USA decreased in the USA by 14% in January from the previous month and were witnessed at USD 4.53/gal. The reason is the decrease in the Diesel’s upstream Crude oil prices due to a decline in crude oil supplies to the importers amid increased demand and stressed inventory levels after decreased refinery run rates at the beginning of the month. Last month refinery run rates declined amid freezing temperatures due to the cold weather. The decrease in the Crude oil prices reduced the cost support on the domestic Diesel prices.

On the contrary, Diesel prices have risen in Asian countries like China by almost 10% during January amid an increase in manufacturing and trading activities after the spring day festival declined domestic inventory levels of Diesel. Demand for fuel inclined after the spring day festival due to increased traveling and logistics activities. Thus, it would be prudent for the US refiners to show interest in the international market, specifically China. At the same time, Crude oil imports in Asia shifted to OPEC+ due to declined supplies by the USA. An increase in imports of OPEC+ crude oil amid a decline in the supplies by US exporters affected the refinery run rates and Diesel and other distillate production in Asian countries. Similarly, in other oil-importing countries, distillate production rates remained slightly lower due to decreased availability of feedstock oil supplies amid high demand for OPEC+ crude oil.

As per the USA’s Environmental Impact Assessment, January Short-term Energy Outlook reports, the domestic refineries had postponed their scheduled maintenance during the spring and autumn months last year due to the low distillate product inventory levels. Furthermore, the refinery margins were high, which inspired the refiners to improve their productivity. This year the refinery margins will remain above average, and refineries may remain under maintenance during spring in 2023. Furthermore, ExxonMobil’s capacity expansion at the Beaumont refinery will increase the refinery margins and Diesel production rates.