ULSD Rack Prices Going Higher as Futures Accelerate Gains
6/02 4:49 PM
ULSD Rack Prices Going Higher as Futures Accelerate Gains CRANBURY, N.J. (DTN) -- Despite weak demand and growing inventory, ULSD futures swung to the highest settlement on the spot continuous chart since March 25 at $1.0921 gallon, rallying 6.31cts or 6.1% on the session, ending well above key retracement resistance at $1.0332 gallon. Resistance is now marked at $1.1041 gallon. The ULSD contract outpaced gains in West Texas Intermediate and Brent crude futures and the gasoline contract despite a very bearish fundamental disposition, with days of forward supply at 47.4 as of May 22 15 days or 46.3% above the five-year average, according to Energy Information Administration data. The price strength also belies weak manufacturing activity in the United States, with the Institute of Supply Management reporting the sector contracting for a third consecutive month in May. Weak manufacturing is a headwind for diesel demand. The unexpected rally in ULSD futures pressed DTN's U.S. diesel rack average to an atypical discount to futures for the sixth time this year, ending 3.93cts below July futures at $1.0528 gallon. Of the six days, five of the sessions have occurred over the past 30 days. The 20-day moving average shows the national rack diesel premium at a paltry 3.465cts gallon, suggesting speculation in futures trading is driving the price action and not underlying demand in the physical market. Brian L. Milne, 1.402.255.8020, brian.milne@dtn.com, www.dtn.com. (c) Copyright 2020 DTN, LLC. All rights reserved.