East Coast Supply Update from Loves’ November 04 2022

Love’s continues to monitor domestic diesel inventories along the east coast, mid-Atlantic and Mississippi River areas as they remain low. We will continue to use Musket and Gemini, members of the Love’s Family of Companies, to secure and deliver product to prevent or minimize impacts to customers. The current market conditions are driven by several factors, some material influencers are listed below.

1. Refinery Maintenance Schedule – the brightest news in the forecast is the restart of refineries throughout these regions that have been down for seasonal maintenance. This is happening now. As refiners restart, we expect it to take some time to bring diesel to markets in the southeast. We anticipate a gradual easing in these market over the next couple of weeks as refiners increase shipments along the East Coast via the Plantation and Colonial pipelines.  It is worth noting that refinery re-starts can be difficult and unreliable, any unplanned delay in return from maintenance would delay the timeline for increased resupply.

2. Drought conditions limiting barge movements along the Mississippi River – the Mississippi River conditions are difficult to forecast as it is a matter of rain. A large Chicago area refinery is in the process of restarting which should increase supply in the region. Trucking is constrained in the area which delays relief from Chicago supply into Ohio and Indiana markets that are currently low on supply. We anticipate a gradual easing of tightness as fuel haulers make progress in refueling those markets. Other locations along the Mississippi River will be impacted by supply from Colonial and Plantation pipelines mentioned in point 1.

3. BP Toledo refinery outage – BP’s refinery issues in Toledo have no scheduled resolution. This is a longer-term concern that will require longer milage fuel hauling. As such, full resolution of the situation there will take time, and may be resolved through demand decline.

4. Demand – Historically, the Thanksgiving holiday has meant a material decline in domestic demand for diesel. In each of the markets mentioned above, this end of November demand decline should offer an opportunity for the market to build inventories at the terminal level. Similar demand relief comes at the end of the year during Christmas and New Year holiday season.

5. Import and export schedules – The US continues to export diesel from the US Gulf Coast, although at a slower pace as domestic markets pay to keep supplies on-shore. Tight Northeastern US markets are also attracting imports from Northwest Europe. This relief appears to arrive near the end of November.

If you have any questions, please contact your Fleet Sales Representative.

Thank you,