Heat Crack Breaks $100 as Soybean Oil Stocks Refuse to Rebuild
Monday gave the clearest confirmation yet of the distillate problem we have been tracking. The U.S. heating-oil crack moved above $102/bbl with September heating oil near $4.44/gal against WTI around $84.30/bbl. ICE September gasoil reached $1,298/mt, up $55/mt or 4.42%, while Sep/Dec backwardation widened to $177.25/mt and Sep/Jan to $217.75/mt. Global diesel flows were already down 26% year on year at 5.3 mb/d, Persian Gulf diesel exports had fallen roughly 80% to 200 kb/d and ARA diesel stocks remained 14% below last year. Strait of Hormuz crossings fell 19.5% last week to 95, with only three recorded on August 16. We continue to use August 20 as the point where acute distillate scarcity starts becoming visible in physical markets. This does not mean inventories disappear on Thursday. It means replacement barrels become increasingly difficult and expensive to source. With the heat crack above $100/bbl and gasoil near $1,300/mt, the market appears to be reaching this inflection point on schedule.
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