A big drop in diesel supplies over the last week likely means seasonal buying from farmers is finally starting, demand that likely will mean higher fuel prices into the growing season.
The government's latest Petroleum Inventory showed diesel supplies down 2.6 million barrels in the last week, coupled with an increase in retail at-the-pump prices. While diesel prices had bucked the move higher seen in the rest of the petroleum complex, that trend likely is over, at least for the next two months.
Agricultural demand in the spring for planting and fall for harvest is the swing factor that typically moves basis in the cash market, which is figured off heating oil futures. Basis continued to weaken last week at the retail and wholesale level, which could provide opportunities for producers wanting to do a basis contract.
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