Diesel stocks fall to 105 million barrels, 14% below normal, as demand runs 5% above last year

U.S. distillate inventories, which are mostly diesel and heating oil, fell 2.3 million barrels last week to 105.2 million barrels, 14% below the five-year average for the time of year, the Energy Information Administration said in its weekly petroleum report on Wednesday. Commercial crude stocks rose 0.9 million barrels to 427.3 million, 2% above average. That crude build was the headline in most coverage, including OilPrice.com, but for fuel buyers the diesel line is the one that matters.

The number behind the number: demand is rising, not falling

A draw in stocks could simply mean refiners made less. This week that was part of it: refinery runs fell 554,000 barrels a day, utilization dropped to 92.5% from 94.0%, and distillate output slipped to 5.0 million barrels a day. But demand did not ease despite prices near records. The four-week average of distillate product supplied, EIA's measure of consumption, rose to 3.78 million barrels a day, 5.2% above the 3.59 million of a year ago, according to EIA's supply table.

Against that demand, stocks cover about 27.9 days of use at the four-week rate, or 26.6 days at last week's single-week rate of 3.95 million barrels a day. A year ago inventories stood at 123.6 million barrels, 14.9% higher than now, per EIA's stocks table. So the market has less fuel in storage while using more, heading into harvest and the start of heating season, when distillate demand usually picks up.

Russia keeps its barrels at home

Russia's government on Wednesday extended its ban on exports of diesel, marine fuel and gasoil through October 31, citing harvest-season demand at home, OilPrice.com reported, and the Financial Times also covered the extension. Before the ban, Russian shipments were about 10% of global seaborne diesel supply. With those barrels off the water, Europe and Latin America lean harder on other exporters, including U.S. Gulf Coast refiners, which keeps pulling on the same inventories that are already short.

U.S. distillate exports had already slowed to 1.33 million barrels a day in the week to September 18, from 1.61 million a week earlier, per EIA's weekly export series. The figure for the latest week had not yet been published.

Who pays: anyone who fills a truck

The national average retail diesel price was $6.382 a gallon on September 28, down 14.7 cents from the prior week but $2.628 above a year earlier, according to EIA's fuel price update. California was at $8.181.

To put that in money: a truck running 2,000 miles a week at 6.5 miles per gallon burns about 308 gallons. At $2.63 a gallon more than last year, that is roughly $810 more a week for the same work, or about $42,000 over a year. A week's price dip of 14.7 cents saves the same truck about $45. Owner-operators on fuel surcharges recover part of that with a lag; small fleets with fixed-price contracts absorb it.

24,679 independent trucking and freight are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 2,868 in TX, 2,828 in CA, 1,916 in FL. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

The same inventory picture feeds into farm diesel during harvest, and into heating oil for homes and businesses in the Northeast as the weather turns. Our trucking operating playbook covers fuel surcharge setup, and the crude oil chart tracks the underlying market.

Sources: EIA Weekly Petroleum Status Report, table 1, table 4; EIA Gasoline and Diesel Fuel Update; OilPrice.com; Financial Times; CheckThisBiz business counts. Days of supply and the per-truck example are our calculations. This is market information, not investment advice.