US Diesel Crack Spread Breaks $100/Barrel Intraday for First Time

en.Wedoany.com Reported - On August 17, the US diesel crack spread broke through $100 per barrel intraday for the first time, peaking at $102.20 per barrel, setting a new historical record. As of 11:56 AM Eastern Time, the indicator stood at $99.82 per barrel, up 2.4% from the previous trading day, with five of the last six trading sessions hitting intraday highs.

The figure that broke through $100 is the spread between diesel futures and West Texas Intermediate (WTI) crude oil futures, not the spot or retail price of diesel. According to CME Group's calculation method, the New York Harbor ultra-low sulfur diesel futures, priced in dollars per gallon, must first be converted to dollars per barrel, then subtracted from the WTI crude oil futures price for the same period. The crack spread is primarily used to reflect the theoretical profit margin for refiners processing crude oil into diesel, without deducting refining costs such as energy, transportation, maintenance, and labor.

Blocked refined product exports from the Middle East, attacks on Russian refineries, and lower refinery utilization in Asia have collectively tightened global diesel supply. The International Energy Agency's August Oil Market Report shows that global refinery crude throughput averaged 80.9 million barrels per day in July, recovering from June but still nearly 5 million barrels per day lower than the same period last year. Diesel exports from Russia, the Middle East, and Asia fell by 1.3 million barrels per day year-on-year, accounting for approximately 20% of global diesel seaborne trade.

US refineries are operating at high utilization rates, but export demand continues to deplete domestic inventories. According to the US Energy Information Administration, as of August 7, US refinery utilization stood at 96.2%, with distillate production of approximately 5.3 million barrels per day; distillate inventories totaled 107.1 million barrels, about 12% below the five-year average for this time of year, marking one of the lowest August inventory levels since 1996.

The tightening diesel supply coincides with peak agricultural fuel demand in both hemispheres. The Northern Hemisphere is entering harvest season while the Southern Hemisphere is in planting season, driving up diesel demand for tractors, harvesters, and agricultural product transportation. The average US retail price for on-highway diesel was $5.257 per gallon on August 10, up $1.503 from the same period last year.