Diesel fuel price outlook
EIA statistics show total U.S. distillate production at the highest level ever for the second week of February despite significant concern over demand. Inventory reports were bearish. One other factor looming in the market: OPEC meets March 5-6. All models show it needs to cut further to balance markets, but it is getting no support from its non-OPEC allies led by Russia. The market will probably start to focus on that soon and there’s nothing bullish there either.
Domestic truckload outbound freight volumes (OTVI.USA) are still surprisingly healthy for this time of the year, up 1.91% year-over-year with long-haul (LOTVI.USA) and dry van (VOTVI.USA) both up 4.5% in the past month. Reefer outbound tender volumes have reversed course and are now down 4.8% month-over-month, and even though reefer capacity is loosening slowly, outbound tender rejections (ROTRI.USA) around 12% are still more than double the rate for dry vans (VOTRI.USA). Intermodal loaded container volumes have nosedived this week and are now down 14.12% year-over-year. This along with Chinese exports in a holding pattern of epic proportions and new cases of the coronavirus being detected in South Korea (our seventh-largest import market), is an eerie sign that the worst is yet to come. All eyes will be on Asia this week.