Trucking Demand Throws a Lifeline to Ailing Refineries
April 2, 2020 EnergyNow Media
By Jeffrey Bair
(Bloomberg) With jets grounded and cars parked, diesel fuel for trucking is giving some relief to refiners as the coronavirus spread cuts deep into demand.The diesel revenue is sorely needed for the refining industry which has seen plants shut from South Africa to Canada and widepsread production cutbacks due to the pandemic-driven collapse in demand.In Houston, diesel spot prices are trading at more than 40 cents per gallon higher than 87-unleaded gasoline after selling for a discount earlier in the month. This translates to much better returns on diesel production versus gasoline. The spread between Nymex diesel and West Texas Intermediate crude is holding over $22 a barrel compared with under $5 for gasoline and WTI.
Profits from diesel are the one thing keeping some refineries running, Energy Aspects oil analyst Robert Campbell said. “There has to be some sort of margin to keep up supply and that cannot come from any product but diesel right now,” he said.
Online retail and medical deliveries have kept demand for trucking strong, said Tom Mallon, vice president for freight futures at FreightWaves. Futures interest in trucking rates off the West Coast has been strong since last week as shippers try to lock in rates before what they expect will be a spike, he said.
“It’s the best house in a bad neighborhood,” Campbell said.
EnergyNow is an online energy news and data media service dedicated to providing essential up to-date information on the United States energy industry.
We provide live feeds designed to help energy professionals, field personnel, business owners, and senior business leaders get the latest energy news and data, energy industry press releases and energy job and event listings.
Help us to improve EnergyNow, Give us your feedback