The ABCs of HDDs

By: Lindsay Farrell / February 26, 2016

It’s no secret that this winter has been much warmer than the last – but how much warmer and how is that impacting the industry?

As of today, there have been 3183 heating degree days (HDD) in the PIttsburgh Area compared to 4449 last year.  HDD is a measurement derived from outside air temperature that is reflective of the energy required to heat a building.  The difference between this year and last, 1266 HDD, helps explain the unusual trends that we are seeing this winter -  stronger gasoline demand and an increase in distillate inventories.  Gasoline demand is generally higher during warmer months when many people are travelling and lower during winter months when many of us “hibernate.” As mentioned in yesterday’s blog, gasoline is at its highest seasonal demand on record, which is likely due to these unseasonably warm temperatures.  On the contrary, diesel fuel demand is higher during colder periods as it is used to heat buildings and run equipment.  On trend with this year’s temperatures, we are seeing an overall build in diesel inventories.

If you are interested in the math behind HDD, continue on.  If not, you should probably skip to the last  paragraph.  To arrive at the HDD number, various methods can be used so it is important to know the method of calculation.  The method used at Guttman, and for this article is: 

2016.02.26.jpg

The 65 degree is representative of the base temperature which is adequate for indoor human comfort.  Each day the HDD is calculated and added to the previous balance to get a running total for the year (HDD year begins September 1).   

This morning WTI and ULSD are trading up $0.84 at $33.91 and $0.0320 at $1.1020, respectively, while gasoline was down $-0.0027 at 1.0533.   Yesterday WTI closed up $0.92 at $33.07, gasoline finished up $0.0456 at $1.0560, and ULSD closed up $0.0106 at $1.0700. 

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Categories: Daily Market Update


Lindsay Farrell

Written by

Lindsay Farrell

As Manager of Quality Assurance and Regulatory Compliance, Lindsay Farrell is responsible for fuel operability across the company’s terminals and customer sites, as well as keeping up-to-date with the latest regulations and best practices within the industry.


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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