US diesel supplies hit tightest level since 2008 heading into winter
EIA said in November 2022 that the U.S. had 25 days of distillate supply in October, the fewest since 2008, with the Northeast even tighter.
In November 2022, the U.S. Energy Information Administration reported that diesel inventories had fallen to their tightest level in more than a decade heading into winter. In an analysis published Nov. 10, EIA said strong demand for ultra-low sulfur diesel in October, combined with reduced global refining output, had drawn U.S. stocks down.
Days of supply
EIA measures how long inventories alone could meet demand, a figure called days of supply. In October 2022, the U.S. had 25 days of distillate supply, the fewest since 2008. From 2017 through 2021, the average was 34 days.
U.S. distillate inventories had been below their previous five-year low since the start of 2022. EIA cautioned that days of supply is not a complete picture, because it does not count production, imports or other sources of supply.
The New York Harbor spot price for ultra-low sulfur diesel averaged $4.36 a gallon in October, the highest monthly average since May 2022. EIA tied the rise to tight global inventories, lower refinery output in Europe after labor strikes and the start of heating season.
Why supplies were short
EIA said reduced refining capacity in the U.S. and globally since 2020 was one of the main reasons for low inventories. It said higher consumption combined with lower production had contributed to the low stocks.
The Northeast was tightest
In its Nov. 9 weekly petroleum analysis, EIA said Northeast distillate inventories fell to 11.4 million barrels on May 20, 41% below the previous five-year low. They recovered to 15.2 million barrels by Nov. 4 but were still 37% below that low.
Regional refining capacity had shrunk. The Philadelphia Energy Solutions refinery, the largest on the East Coast, closed permanently after a 2019 fire. East Coast distillate imports from January through August 2022 averaged 156,000 barrels a day, down 38% from the same period in 2021. EIA said tight Atlantic Basin markets, driven partly by Russia's invasion of Ukraine and the sanctions that followed, could limit how much more fuel the region could import.
U.S. distillate demand rose from an annual low of 3.4 million barrels a day in mid-September to 4.1 million the week of Nov. 4.
What it meant for carriers
Diesel and heating oil come from the same distillate pool, so winter heating demand in the Northeast competed directly with trucking for limited supply.
EIA said the Northeast's tighter inventories had contributed to rising prices in the region, which mattered most for fleets fueling on East Coast lanes.