Distillate in Depth – The Supply, Demand, and Price Picture

While All Fuel Prices are High, Natural Gas Gains Favor Fuel Switching

Notes: Transco Z6 Spot Natural Gas, NY Harbor No. 2 and Resid (.31-1.0% S)

Source: Reuters


	SThe demand estimates behind the prior distillate inventory picture also did not include any unusual fuel switching, which may occur.

	SThe loss of natural gas production on the Gulf Coast is affecting prices relative to petroleum products. With both the need for portable generators running off of diesel in the areas affected by power outages and the reduced natural gas volumes and price differential encouraging early fuel switching in the Northeast, we could see higher distillate demand than assumed.

	SThus, we still are in a precarious position for winter heating oil. Even though refineries are recovering even as we speak, the story is far from over for heating oil supplies.