This Week in Review – May 13, 2022

By Published On: May 13, 2022Categories: Crude, Daily Market News & Insights, Fuel Demand, Week in Review

Fuel prices have seesawed this week, falling towards the beginning of the week but recapturing losses later on. This week, many headlines have focused on fears of a recession. With energy prices squeezing budgets – both corporate and private – and interest rates going up, there’s a real concern that the economy could suffer. Recessions bring a reduction in fuel demand, causing prices to go down.

However, no matter how worried one may be about a recession, the current supply picture suggests higher prices. Inventories continue falling, eliminating any slack in the supply chain. US diesel inventories are 25% below historical averages, hitting 14-year lows. Gasoline inventories are also slipping at a time when summer fuel demand is beginning to rise. This week’s picture is continued supply tightness – sustaining high prices across the US.

Of course, the East Coast is at the forefront of the conversation. The Southeast is extremely tight on supply. Because Northeast fuel prices are so high, many shippers are by-passing the Southeast entirely, sending fuel from Texas refiners straight to NY Harbor. Both the Northeast and Southeast are seeing historically high prices above $5/gal for wholesale diesel fuels. Other parts of the country have seen less of an impact since the East Coast is mostly isolated from the rest of the country’s fueling infrastructure. Expect continued East Coast volatility in the coming weeks as weak pipeline shipments and lacking imports keep the entire coastline tight.


This article is part of Crude

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