Washington Grabs for Any Relief as Diesel Inventories Head Toward October Low
EIA’s September outlook gives the diesel market a specific concern for October: its chart projects US distillate inventories falling to approximately 93 million barrels at month-end before recovering in November and December. That is an inventory low, not a forecast of an October price bottom. EIA expects stocks to remain below the 2021–2025 range through year-end and most of 2027, despite the subsequent rebuilding. Its forecast was finalized on September 3 and assumes improving Middle East flows; it explicitly warns that restrictions persisting beyond year-end would produce higher diesel cracks than forecast. September 29’s prices illustrate that risk without proving the forecast: November Brent traded down $2.71 at $102.57/bbl ahead of expiry, while the nearby heating-oil/WTI spread reached $115.80/bbl. Heating oil at $4.8868/gal multiplied by 42, less WTI at $89.45/bbl, produces that spread. Of its $8.67/bbl daily increase, $5.52 came from stronger heating oil and $3.15 from cheaper crude. This nearby futures spread is not a complete refinery margin, but the arithmetic shows diesel itself supplied most of the widening.
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