HOUSTON, May 31 (Reuters) - U.S. diesel demand fell to its lowest seasonal level in March since 1998, while crude oil output rose to a multi-month high, data from the U.S. Energy Information Administration showed on Friday.
Demand for distillate fuels, which includes diesel and heating oil, has been hit sharply this year under pressure from sluggish manufacturing activity . . . .
Truck Tonnage (shipped) typically parallels the S&P.
This chart makes it seem like someone (the Fed) printed a bunch of money that wound up in the hands of the financial class, but that not much is actually being shipped in the actual economy.
Yes you are reading that right.
The US is shipping the same amount of stuff it did during the COVID lock down. (The COVID lockdown was a bad time, right?)
That’s not good…seems like it’s going to have longer term consequences if I’m seeing, understanding this correct.
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Text book leading indicator.
diesel prices have gone down, isnt that a good thing for the economy
i mean people were complaining about the high price. so when demand lowers, that might mean the price was too high.
Allan
It was all doom and gloom with the Meant Tweets in office. There’s something (D)ifferent about those kiwi-laced tongues now. 
The article(which I forgot to link) is discussing demand volume.
Products supplied of distillate, EIA’s measure of demand, fell over 6% from February to 3.67 million barrels per day (bpd) in March, lowest for the month since 1998.
US diesel demand for March hits 26-year seasonal low, EIA says | Reuters.
Diesel price is down, and yet . . . no one is buying it anyway.
This definitely suggests a demand drop is causing lower prices.
Drop price → demand does not come back
Drop price more → demand still does not come back
Drop price even more - nope not yet. Still no demand
The cause of the drop in price is what is important, not the drop itself. A supply increase, with corresponding price drop, driven by increased fuel production is good. When the supply increase, and corresponding price drop, is driven by falling commercial shipping it is bad.
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That seems to be the case.
Demand drop caused price drop.
In fact, real US retail sales are down.
~ 6% from the high
~ 0.5% YTD
(see below)
Given that there is currently much more demand for “experiences”
the goods economy might be in a tailspin.
It is basic economics, but acknowledging that falling non-government economic activity is the cause goes against the Bidenomics narrative of a thriving economy.
Joe Biden was much closer to accurate when he was blaming everyone else.
I’m not sure how much of the blame we can lay at his feet, but
- He is wrong to say what he says about the economy
- He is wrong to do what he does about the economy
To my memory we have had at least three presidents (Roosevelt, Carter and Reagan) who took the other path and said “Yup, thing ain’t so good, Here’s what we’re gonna do about it.”
He should have followed their lead.
Politicians, and I mean all politicians, try to take credit for being the cause of good economic activity. Reality is that they can contribute to conditions affecting economic activity, for good, or for bad, but not the actual economic activity itself. The wise politician tries to get out of the way of economic forces, while the fool tries to control those forces.
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Excuse my ignorance… but isn’t this what we want? If we want inflation to drop… doesn’t demand have to drop too?
Inflation is a symptom (an indicator) of an overheated economy, a bubble if you will. Sure we want the symptom to go away, but that doesn’t mean that the recovery period is going to be pleasant. Economic contraction is the natural consequence of an overheated economy. Falling commercial shipping tonnage is a leading indicator for falling orders and slowing economic activity.
Correct. Which is what we want, to some extent, right? Otherwise interest rates would come down. However if we dropped interest rates a point… the economy would heat up again… driving demand and raising prices.
In the sense that “bust always follows bubble,”
& “this was inevitable we are better off admitting it and letting it happen, than creating a government program to stop it,” yes this is what we want.
Bust always follows bubble and any government plan to force truckers to buy more diesel would be a bad plan.
Yes, during the dot.com bust and the housing bust (and COVID) many of us here said “Let it happen. No bailouts. Let the free market clean out the barn.”
It is a good thing that Joe Biden does not come up with a plan to try to boost demand for diesel. You are correct to point that out.
Price is down because of less goods being moved. That’s what I’m seeing.
That is the correct way of thinking,
and that is the most probably reason.
Just finished reading two articles. one on the Atlanta Feds slashing its forecast for GDP from 4.2% to 1.8% and simultaneous reports of China, the other BRIC economies and European central banks dumping hundreds of millions of dollars in treasuries and agency bonds. Slower growth, coupled with market driven, rather than Fed driven, rate increases point to economic bad times ahead.
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