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Americans on a Buying Spree Give Battered Diesel Market a Lift

Jeffrey Bair
·2 min read

(Bloomberg) -- The pandemic-driven surge in online shopping continues to sustain diesel as a bright spot in an otherwise devastated U.S. fuel market.

The latest signs are coming from ship containers arriving on the West Coast at unprecedented rates, with goods then being trucked from Los Angeles to as far as Atlanta a lot more frequently than a year ago.

Demand for everything from medical equipment to home-office supplies to gardening tools is soaring as spending patterns shift. Retailers are also making up for products they couldn’t source earlier this year and preparing for the holiday rush. All that means more consumption of the stuff that makes trucks move: ultra-low sulfur diesel, or ULSD.

“The trucking industry is the one shining light for the crude oil complex since Covid hit,” said Kyle Lintner, managing director of freight consultant K-Ratio. Refining margins have “shifted dramatically in ULSD favor since trucking demand is actually up while gasoline consumption is down.”

Truck trips originating in Los Angeles and lasting more than 1,000 miles have nearly doubled from 2019 levels, according to Lintner. Most trips from southern California go to Dallas, Chicago and Atlanta, he said.

Dockworkers at the West Coast port of Long Beach processed a record number of cargo containers last month: more than 800,000, a first in the terminal’s 109-year history, according to data from the port. At the port of Los Angeles just four miles west, container imports were at a seasonal 25-year high in October, data compiled by Bloomberg show.

All those cargoes are then loaded onto tractor-trailers, whose fuel consumption has helped West Coast diesel stockpiles tumble 24% from this year’s high of 15 million barrels in April, according to U.S. government data.

Over the last month, miles traveled on U.S. interstates by trucks increased over 3% each week from 2019 levels, data from the Department of Transportation showed.

Diesel futures in New York have jumped 19% so far this month, ending the week at $1.2863 a gallon. That was almost double the increase in gasoline prices.

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