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Russian exports of diesel to the United States last month hit the highest in three years as typical winter weather drove higher demand for heating and power generation in the Northeast.
Bloomberg reported that some 1.55 million barrels of diesel were currently traveling from Russia to the United States, due to arrive by the end of this month, data from Vortexa has shown.
The increase in Russian diesel deliveries comes as fuel inventories on the East Coast have fallen to the lowest in eight years while demand is running at the highest since 2018. At the same time, Bloomberg noted, refining capacity on the East Coast has also declined because of low margins and a refinery explosion.
It appears that Russian fuel also has few alternatives for the U.S. Northeast right now: Canada shut down a refinery in the eastern part of the country early on in the pandemic while Europe, another supplier of fuel to the United States, is too deep into its own energy troubles to be able to spare a few million barrels of diesel, according to the Reuters report.
The strength of U.S. demand for oil is evident in the latest movements in West Texas Intermediate: the local benchmark topped $92 a barrel this week for the first time since 2014. The immediate reason for this latest rise is the worry that another cold spell in Texas could once again hit production, which would contribute to the already tight global oil supply.
At the same time, winter is a seasonally strong time for oil demand, which has contributed to WTI's recent climb. The geopolitical situation around Ukraine is also a bullish factor.
"The tensions around the Ukraine conflict are providing support, and we have growing global demand and we're not really ramping up supply to meet it," Reuters quoted Tradition Energy's director of market research Gary Cunningham as saying this week.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.