US diesel inventories fell to a record low in the same period, and the approaching winter heating season heightened supply concerns

The Zhitong Finance App learned that data released by the US Energy Information Administration (EIA) on Wednesday showed that in the week ending August 21, distillate fuel oil stocks, including diesel, fell by 2.2 million barrels to 103.4 million barrels, 14% lower than the average for the same period of five years, the lowest level in the same period since records began in the early 80s of the last century. As the northern hemisphere's winter heating season and fall harvest season usually begin around October, global diesel demand will rise seasonally, and current inventories are dangerously low, which may further drive fuel prices and increase energy-driven inflationary pressure.

Affected by the continued blockage of refined fuel exports from the Strait of Hormuz, retail diesel prices in the US have surpassed $5.60 per gallon, approaching the highest level since the outbreak of the US-Iran war.

The EIA report on the same day showed that for the week ending August 21, US commercial crude oil inventories (excluding strategic oil reserves) increased by 95,000 barrels to 428.9 million barrels, 1% higher than the average for the same period of five years. The increase was lower than market expectations, but it had already recorded an increase for the fourth consecutive week, mainly due to the decline in both imports and exports and the same level of production. Gasoline inventories fell by 2.5 million barrels during the same period to 206.8 million barrels, 6% lower than the five-year average.

Crude oil futures closed down for the third consecutive trading day on Wednesday. The market anticipated that US economic pressure on Iran rather than military action might lead to the reopening of the Strait of Hormuz. This shift in sentiment has dampened oil prices. Ole Hansen, head of commodity strategy at Saxo Bank, stated in the report: “The market has moved from the previous high probability of long-term interruptions in pricing and escalation of conflicts to a scenario where parts of the pricing strait are reopened, shipping arrangements are negotiated, and the risk of military confrontation is reduced.”

The two major crude oil price benchmarks fell to their lowest level since August 10 during the day, but after the EIA inventory report showed that the increase in US crude oil inventories fell short of expectations, the decline narrowed. Recent monthly WTI crude oil futures for October delivery on the New York Mercantile Exchange fell slightly by 0.1% to close at $82.23 per barrel; recent Brent crude oil futures for October delivery fell 0.8% to close at $87.84 per barrel.

In terms of US natural gas futures, demand in the electricity sector remains strong due to the high temperature forecast to continue until late August and early September. The September contract rose 2.6% to close at 2.842 US dollars/million British thermal units in recent months, setting the highest closing level in a month.