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- ULSD/HO September December spread 8-5-2025
The September December ULSD spread has fallen quite a lot in the past nearly 3 weeks from its peak of almost 17 cents. Currently the spread is worth 2.70-2.75 cents.
The sharp drop in the spread has come over the 3 week period during which distillate supplies, as per DOE data, have increased by 10.739 MMBBL, thus alleviating worries over supply tightness. Yet, distillate supplies as of mid-July were the lowest they have been seasonally since 1996. They are 16% below the 5 year average as of last week's data, as per the DOE data.
In Europe, ARA Gasoil stocks fell in the period to July 31 and are at their lowest level in 20 months and are 30% below the ten-year seasonal average. (Reuters)
This fall, U.S. refiners are planning a lower-than-usual level of maintenance, with about 529 MBPD of crude-processing capacity expected offline, according to a report by Bloomberg. This is about half of the capacity taken offline for maintenance during the same period last year. This may be contributing to some of the softness in the front end of the distillate spreads.
But, given the fact that distillate supplies remain on the low side and European supplies are very low, this should support the front end of the ULSD curve--or at least arrest the decline in the spread values.
Technically, the momentum for the September December ULSD spread is oversold. Support below lies at 2.41-2.50 cents and then at 1.68-1.73 cents. Upside resistance is seen at 4.73-4.78 cents and then the 6 cent area.
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