ULSD Crack Surpasses $100/Bbl as Supply Tightens


   
   HOUSTON, TX (DTN) -- Oil futures prices climbed for a third consecutive 
trading session Tuesday (8/18) marking a three-week high amid a global supply 
crunch fueled by disruptions to vessel traffic through the Strait of Hormuz, 
ongoing conflict in the Middle East and the resulting closure of the strategic 
waterway.

   The ULSD crack -- the price difference between a barrel of the most actively 
traded NYMEX ULSD and WTI contracts -- surpassed the $100 bbl mark for the 
first time in history, settling at $102.02 bbl. ULSD rose to the highest since 
early April on reports of new Iranian strikes on tankers and Houthi attacks on 
Saudi refineries. Prices were under upward pressure after both Washington and 
Tehran ruled out extending the 60-day ceasefire period that officially expired 
Monday (8/17).

   Tthe ULSD-WTI differential stood at just $42.01 on February 27, the final 
trading day before the start of the U.S.-Israeli war on Iran. Last month, the 
spread surpassed the previous record high $86.82 bbl reached in October 2022 
when the European Union agreed to ban refined fuel imports from Russia, which 
has until then served as the bloc's primary diesel supplier.

   The effective closure of the Strait of Hormuz, combined with ongoing 
refinery attacks across the Persian Gulf, has squeezed global diesel supplies 
since early March. Beyond the direct loss of nearly 4 million bpd of middle 
distillate exports, the market had to contend with a still ongoing 
crude-shortage-induced refining lull affecting most of Asia.

   Additionally, Ukraine has been stepping up its attacks on Russian energy 
infrastructure, taking offline around a third of refining capacity, which 
subsequently led to refined product export bans and fuel shortages, further 
tightening the screws on the global diesel market.

   On the crude side, U.S. stockpiles, which have dwindled rapidly amid the 
largest oil supply disruption in history, posted a surprise increase during the 
first week of August amid a surge of imports, the U.S. Energy Information 
Administration (EIA) reported last Wednesday. Weekly inventory estimates by the 
American Petroleum Institute are scheduled for release later today, followed by 
EIA data on Wednesday (8/19).

   The front-month NYMEX WTI futures contract rose $0.47 to settle at $84.97, 
while ICE Brent for October delivery rose $0.11 to $90.98 bbl.

   Downstream, NYMEX ULSD futures for September delivery rose $0.0191 to 
$4.4562 gallon. Front-month RBOB futures, meanwhile, increased $0.0370 to 
$3.3071 gallon.

   The US dollar index inched up 0.016 points to 99.55 against a basket of 
foreign currencies.




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