Diesel Generated. The Energy Report 07/17/2025

Even after a massive one-week increase of 4.2 million barrels in distillate supplies according to the Energy Information Administration, they are still 21% below the five-year average even at the lowest level recorded for this time of year since 1996.

This comes as distilled inventories in Europe have been trending down and were previously reported to be about 25,000,000 barrels below the 10-year seasonal average. Diesel prices have also risen due to the Russia-Ukraine conflict.

Additionally, ahead of the attack on Iran, there was a rush to secure diesel supplies, as Iranian oil is valued by refiners for producing distillates, especially in India and China.

We saw the diesel crack spread jump when President Trump was going to announce significant sanctions on Russia and then pulled back when it was delayed but now we must keep an eye on Iran because things could be heating up politically in that situation.

With tensions simmering over Iran and the delicate dance of diplomatic signals from world powers, traders are on edge, closely watching every headline. Diesel margins spike and retreat with each rumor or announcement, and the potential for escalation looms, shaping not just prices but also the strategies employed by refiners and policymakers worldwide.

According to a report from NBC, the Trump Administration decided not to proceed with a larger military plan involving multi-day airstrikes on Iran’s infrastructure. The decision was reportedly influenced by considerations regarding global security and avoiding involvement in regime change or a prolonged conflict.

There are unconfirmed reports that Iran-backed groups attacked U.S. oil facilities in Iraq, which could add to oil’s risk premium if true. In a fluid and unpredictable geopolitical landscape, even minor developments can send ripples through the energy markets and especially diesel as supply is too tight.

The Energy Information Administration’s weekly demand figures have shown notable fluctuations, which many believe are exaggerated. To provide a clearer view, here are the four-week moving averages: Total products supplied averaged 20.3 million barrels per day, down 1.1% year-over-year. Motor gasoline averaged 9 million barrels per day, a 1.6% decrease. Distillate fuel rose 4.4% to 3.7 million barrels per day, while jet fuel increased by 3% compared to the same period last year.

Guess what? The latest numbers are in, and it’s official: global oil consumption hit a record-breaking 101.8 million barrels per day in 2024! That’s just a notch above last year—up by 0.7%—and marks the highest level ever recorded. It’s wild to realize demand has been climbing by about 1% every year over the past decade, mostly thanks to countries outside the OECD. The energy world just keeps moving!

Natural gas prices are also edging up due to a combination of strong demand, strong exports, hot weather and tropical activity. Why have natural gas prices been rising in the last couple of days on the futures exchange? The Fox Weather app has been suggesting hotter than expected weather for the southern central and eastern US between July 19th and 28th. That is going to raise demand expectations for natural gas for electricity usage but there’s also more bullish news.

Countries have cut oil deals with the Trump Administration to avoid sanctions and companies with LNG exports are on track to climb from 13 BCF a day to an impressive 17 BCF a day by year’s end. That should keep the back end of the natural gas curve nice and strong. Even with a dip in rig counts, U.S. production is holding steady—boosted by gains in the Permian Basin and Appalachia, though there will be slight drops elsewhere.

Now is the time to download the Fox Weather app and turn on weather alerts as the storm in the Gulf of Mexico could also impact not only natural gas but oil as a The Fox Weather Center reports that the Gulf Coast is facing a surge of tropical moisture. Invest 93L moved through the Florida Peninsula on Tuesday and threatens to produce heavy rainfall along the Interstate 10 corridor into the weekend. An invest is a designation used by the National Hurricane Center (NHC) to indicate an area that is under increased scrutiny for the possibility of tropical development. Earlier this week, Florida was the recipient of the heavy rainfall, but the chances of precipitation have now shifted westward and will continue to impact communities in Alabama, Mississippi and Louisiana through at least Saturday.

Because waters in the Gulf are warm and there is enough spin in the atmosphere, the NHC has highlighted an area of the northeastern and north-central Gulf for a low chance of development into a tropical depression or tropical storm, but as long as the center is near or over land, chances will remain minimal. Due to the system’s limited time over the warm waters of the Gulf, not much tropical development is expected over the next couple of days.

So download the Fox Weather app to keep up with the latest developments on this storm. Stay tuned to the Fox Business Network invested in you.

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