Diesel Prices Staying Stubbornly Strong
Larger than expected drop in crude oil supplies.
Bryce Knorr
Published: Jul 15, 2009
After trading below $60 earlier in the week, crude oil prices are sharply higher on Wednesday, complicating producers' attempt to buy fuel for the fall harvest. Indeed, diesel prices are showing stubborn strength for this time of year.
The catalyst for today's rally in part stemmed from the government's latest Petroleum Inventory, which showed a much larger than expected drop in crude oil supplies. While gasoline stocks were higher, crude inventories fell by 2.8 million barrels. Though inventories are still at five-year highs for this time of year, this week's decrease is the latest in a steady string over the past two months.
The news, along with a more positive economic outlook and weaker dollar, sent prices higher across the petroleum complex. Heating oil, which is trying to make a seasonal bottom, led the way. Distillates grew by only 600,000 barrels, the smallest increase of the last month, with all the gain in heating oil. Supplies of diesel held steady in the last week, reflecting a firm cash market. To read Bryce Knorr's complete weekly energy review, click HERE.
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