U.S. inventories of diesel fuel and home heating oil saw small gains this week, an early but encouraging sign at the start of the winter heating season — and with stocks depleted to their lowest level in decades.
Distillate fuel inventories increased in the United States by more than 3 million barrels in the six weeks between Oct. 7 and Nov. 18, according to data from the Energy Information Administration.
The gains, caused primarily by easing global demand and extraordinarily high prices, are small yet significant for this time of year, when inventories normally begin to fall amid heightened demand for home heating oil, especially in the Northeast.
The last time the U.S. saw its distillate stocks rise during the same period was 14 years ago, in 2008, according to government data.
News of the slight increase comes as the U.S. has struggled to respond to a diesel supply crisis due primarily to a sharp imbalance between refining capacity and demand, including from the U.S. and China, the world’s top two diesel refiners, each producing at less capacity than they were compared to pre-pandemic levels.
The U.S. ban on Russian oil imports also affected the industry. Before the war in Ukraine, the U.S. was importing roughly 700,000 barrels of petroleum from Russia each day, most of which were shipped directly as refined petroleum products.
The supply crisis sent U.S. distillate stocks plunging to their lowest level since 1951. Prices for diesel fuel have climbed 43% higher over the last 12 months, compared to just 15% for gasoline.
Analysts have warned that diesel costs are expected to average around $6 per gallon this winter, though they could climb higher if the weather gets colder.
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The small uptick in distillate inventories is due primarily to a slight slowdown of U.S. distillate exports, as well as a small rise in domestic production and a reduction in global demand.
In the four-week period ending Nov. 18, U.S. producers sent an average of 4.03 million barrels per day to the domestic market.
But the more encouraging news was due to lower exports: U.S. distillate exports slowed by 0.4 million barrels per day (bpd) since Oct. 7, government data shows.
This could be encouraging news if the trend continues, but analysts say it’s unlikely that distillate inventories will return to normal levels until summer at the earliest.
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According to the EIA, residents who rely on home heating oil will spend an average of $2,354 to heat their homes this winter — a 27% increase from the previous winter and the highest price point in more than 25 years.
