Hello Traders,
U.S. diesel prices have hit a record high of $6.50 a gallon. Because fuel costs are so high, everyday shoppers have less money to spend, and people are starting to worry that inflation is getting out of hand, which is pushing government bond yields up to levels we haven’t seen since 2007.
This energy crisis is piling up from multiple directions:
Extreme Heat: A scorching summer in Europe caused a massive surge in demand for fuel.
Supply Blockages: Key shipping lanes like the Strait of Hormuz are still shut down, and drone strikes have hit major oil refineries in Russia.
A Tough Winter Ahead: Because of these shortages, Europe is staring down a very difficult winter.
At the same time, U.S. oil refineries are running flat-out at maximum speed to try and help, which leaves them dangerously vulnerable if a machine breaks down or needs sudden repairs.
The Trump administration is reportedly weighing a ban on diesel exports to cool domestic fuel costs. However, such a move would create a worst-case scenario for European markets while backfiring domestically: forced reductions in refinery output to prevent inventory gluts would ultimately constrain distillate slates and drive U.S. gasoline prices significantly higher.
POSITIONING UPDATE
UGA 0.00%↑ GASOLINE
