Puzzles and Patterns

By: Greg Gill / February 1, 2018

January 2018 is in the books! As we look back some might say it was quite the puzzling month for Ultra Low Sulfur Diesel futures with a high of $2.1431 and a low of $2.0363. Which way in the market is up, down, high, or low were the common questions being asked by industry experts during their analysis of ULSD for February delivery.

Going into February, there is a strong case to be made for a continuous march higher:

  • Decline in US distillates inventory levels; down 19% versus 2017
  • Weather; there have been reports of a polar vortex moving into the Midwest and Mid-Atlantic states. A large piece of the polar vortex will be shifting south over the next 10 days sending Michigan and the Great Lakes region into a cold spell.
  • OPEC compliance; production cuts rose to 138% taking additional supply off-line
  • Strong demand for distillates; up 17% compared to 2017
  • Refining turn-around season begins; which will take supply off-line

For those that believe the market has additional upside, an interesting pattern has developed since early October 2017 that may indicate an opportunity for a consumer to consider a fixed price strategy for a portion of their fuel needs. Let's review why:

chart-2.jpg

HO began a climb in October into early November. A $0.08 jump in the market eventually settled into a $0.05-$0.10 range throughout November into December. For almost two months HO bounced off the low $1.90 levels and stayed just below the $1.98 threshold. Mid-December 2017 upward momentum began to develop and HO took an almost $0.10 jump one day after Christmas. In January 2018, as previously stated, HO stayed in a range of near $2.03 and a high of $2.14.

It appears that patterns from December 2017 through January 2018 look similar to the movement we saw in October through November 2017. Could February 2018 through March 2018 have a similar pattern? Could bullish factors cause another near $0.10 jump in February like we saw in late December and early November of last year?

Call your Guttman Sales Representative at (800) 245-5955 if you would like to discuss fixed price strategies further. Click here to learn more.


Categories: Daily Market Update


Greg Gill

Written by

Greg Gill

I’m passionate about fully understanding my customers’ fuel operations and the fuel markets in which they operate. I want them to view me as their fuel expert. To develop strong, trusting partnerships with customers, I have to provide them with meaningful and timely information to ease the challenges of making smart fuel decisions, allowing them to focus on their core business.


Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.


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