SPR Draws 5.3 Million Barrels as Diesel Tightness Starts Showing Up
The 4.4 million barrel build in U.S. commercial crude is the wrong number to trade in isolation. The SPR fell another 5.3 million barrels to roughly 293.4 million, more than offsetting the commercial build. Cushing lost another 1.3 million barrels and distillate inventories fell 1.53 million to roughly 105.6 million barrels, about 13% below their five-year seasonal average. Refinery utilization is already around 97.2%. The U.S. refining system is therefore running close to its practical limit while distillate stocks continue to decline. This is exactly the type of evidence we expected to start appearing around August 20. The thesis was never for a sudden diesel crisis on a specific date. It was for the beginning of serious diesel supply problems becoming visible through inventories, regional availability, replacement costs and logistics. Nothing in today's data changes that view.
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