Are NE US Balances Another Signal of Softness?

The NE US, once the center of the low storage hysteria, looks well supplied by imports and inter-PADD transfers. Softening spreads seem to be signs of seasonal softness, incline with prices falling.

Three Point Summary

1. PADD 1 imports appear to be headed to storage in some form - both crude and distillates showed builds. As the USGC’s importance as a storage center grows, it looks like it might be taking barrels from more than just Cushing. Falling refining capacity in the NE means current storage is probably in line with long-term norms, especially with USGC crude and products accounting for a growing percentage of total supply.

2. USGC diesel’s discount has traded 2-3 cents wider as prices have sold off, possibly reflecting softer demand in PADD 1. At ~8 cents, just below the summer’s 5-7 cent spread.

3. Prices may find support from falling output during maintenance season, but the market seems to have settled into a more negative sentiment than recent falls, looking for bullish demand signals as prices, spreads, and cracks decline.