Story
US Diesel Futures Post Largest Gain in Four Years After Russian Export Ban
Summary
U.S. diesel futures surged on Wednesday following Russia's announcement of an export ban on the industrial fuel. The move adds significant pressure to a global market already facing tight supplies and declining inventories.
U.S. diesel futures experienced their largest single-day increase in four years on Wednesday after Russia announced a ban on its diesel exports. The ultra-low sulfur diesel futures benchmark on the New York Mercantile Exchange closed 11.6% higher at $154.71 a barrel, its highest level in over a month. The jump marks the contract's most significant daily gain since March 2022.
Russia's decision to halt exports is reportedly a response to an increase in Ukrainian drone attacks targeting its oil refineries. This development compounds existing strains on the global diesel market, which has been contending with supply constraints from multiple sources.
Market analysts note that global diesel supplies were already limited due to factors including refinery closures in various regions, ongoing production cuts by the OPEC+ group, and other geopolitical disruptions. "Diesel is the one product that everybody needs to watch," said Tom Kloza, chief energy adviser to Gulf Oil, adding that the market was "stressed even before the Russian ban."
AdIn the United States, government data released Wednesday showed a significant draw on domestic stockpiles. Inventories of diesel and heating oil fell by nearly 5 million barrels last week to approximately 103.6 million barrels. This decline, attributed to a seasonal record for exports and strong domestic demand, leaves U.S. inventory levels about 7% below the five-year average.