It seems that the sky is falling. Last week’s downward trend continues, and today we see it spiraling out of control. Diesel is showing early losses of $-.0453 to and is trading @ $1.4171, while gas is down even more, $ -.0612, trading @ $1.4837. WTI for October is down $2.05 and is falling even further under $40 to $38.40/barrel and one analyst believes that seeing a low such as 2008’s $33/bbl is a “conceivable reality.” The big market change this weekend was Chicago gas, which saw a cash market drop on both CBOB and RBOB of 32 and 21 cents respectively. BP, whose Whiting refinery had unplanned downtime on August 8th and was expected to be shut down for a month or longer, may in fact be returning to service much sooner than expected with a temporary fix. This can be attributed to the cash market drop and the collapse in retail gasoline prices in the Midwest.
On the topic of refineries, PBF Energy added to the mess late last week when a small fire caused them to shut down a cat cracker at their 190,000 bbl/day refinery in Delaware City. This refinery is a key player in the New York Harbor spot market, and it will be interesting to see how the market continues to react when supply tightens up a little more this week.
Locally, diesel prices have on average been falling two to three cents per week, but in our region, have not undercut gasoline prices. Diesel tends to be more expensive, largely due to its strong global demand, production costs, and higher federal taxes. Additionally, these low prices for diesel are not believed to be sticking around much longer. Agricultural harvests in the fall time, as well as the increased demand for heating oil season, typically drives the price up. Will the seasonal demand increase be enough to increase the price of diesel and outweigh the falling price of crude?