2 fuel retailer groups have a message: There will be enough diesel

(This writer has attended SIGMA annual meetings in the past and as one of their outside attorneys noted more than once at those meetings, their members would list supply as their first, second and third most important issues. The member companies, as with NATSO, are not part of a larger independent oil or refining company so cannot look to a parent or associated company for supply.)

Updated figures on inventories will be released by the Energy Information Administration Wednesday. The number that has been the focus of general media attention is “days cover,” which as of last week was down to less than 26 days. That figure is derived by taking total inventories and dividing it by average daily consumption. It gives a figure of how long inventories would last if all U.S. refineries shut down and no imports were brought to the U.S. That is not the same as “we are going to run out of diesel in 25 days,” which is how Days Cover has been interpreted by many.

The weekly forecast by S&P Global Commodities Insight released Tuesday is that inventories of all non-jet distillates, which is between 85-90% diesel, will drop by 900,000 barrels in the Wednesday report. To know what that would mean for Days Cover requires knowledge of the figure on consumption, or as the EIA calls it, Product Supplied. The combination of the inventory number plus consumption will yield an updated Days Cover figure.

In the joint statement, Fialkov conceded the amount of diesel in stocks is a concern. In particular, the impact of an unforeseen disruption would be exacerbated by the low inventories.

“The low inventory levels leave us exposed to sudden increases in demand or decreases in supply,” he said in the statement. “For example, if a major refinery shuts down for a period of time, or it gets unseasonably cold in the northeast, the cause for concern could increase.”

The NATSO/SIGMA statement said nothing further. But it can be seen as this key trade group’s reaction to market fear that diesel pumps are just a few weeks away from “running out.”

Diesel on the CME commodity exchange pulled back Tuesday. The settlement of $3.707 a gallon was down 1.04 cents on the day. However, that 0.28% decline was far less than the more than 2% decline in both the WTI and the Brent benchmark, signaling continued strength relative to the broader petroleum complex of key prices.

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