[Oilprice.com] U.S. manufacturers are recovering from an extended slump in activity and their energy consumption is about to start rising, with the risk of tightening an already tight diesel market.
Reuters market analyst John Kemp reported the index for manufacturing activity had improved to 49.1 for January from 47.1 in December. The latter figure was the highest since October 2022, Kemp noted in his report, adding that the trend signaled a return to growth.
As manufacturing activity improves, however, diesel demand begins to increase in lockstep. This might be problematic in case of a fast recovery because distillate inventories in the U.S. remain below the five-year average, by 5%, per the latest weekly petroleum report of the Energy Information Administration.
The state of distillate inventories, with the total as of January 26 standing at 10 million barrels below the 10-year seasonal average, per Kemp, is better than it was in late 2023. At that time, distillate stocks were 19 million barrels below the 10-year average. Even with the boost in stockpiles, the distillate supply balance remains elusive. |