Crude Cools, Distillate Stress Refuses to Break
Energy finally took a breather Thursday. September WTI fell 2.7% to $81.00/bbl, Brent dropped 2.3% to $86.98/bbl and September ICE gasoil declined about 1.2% to roughly $1,235/mt. EIA also reported a 17.4 million barrel increase in U.S. commercial crude inventories. The curves relaxed with September/December gasoil backwardation falling 5.6% to +$160.75/mt and September/January falling 5.3% to +$198/mt. Yet the more important distillate signal moved in the opposite direction. The heating-oil crack reached $97.22/bbl while WTI fell more than $2/bbl. Crude inventories increased and outright prices fell, while refining economics for distillate remained near extreme levels. This looks like a correction in crude pricing rather than an improvement in the diesel balance.
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