Takeaway

The presenter argues the real energy crisis is in diesel, not crude, with prices now just four cents shy of the 2022 all-time high. This is driven by historically tight inventories and geopolitical supply shocks from the Russia-Ukraine conflict, creating significant price and availability risks for farmers heading into harvest.

What the presenter said

• Diesel prices jumped overnight and are now just a few cents away from all-time highs. [00:00]
• The real energy crisis is in diesel, not crude oil, due to record low inventories pushing prices to record levels. [00:16]
• The escalation of the war in the Black Sea is fueling the fire for diesel prices. [00:28]
• Farmers who waited to buy diesel before harvest are now getting squeezed on price and availability. [00:31]
• The all-time high diesel price of $5.82 is likely to be taken out within days due to Ukraine drone strikes damaging Russian refineries. [00:51]
• Russian refinery strikes have caused Russia to extend their export ban throughout September, creating historically tight diesel inventory. [01:05]
• The Energy Information Administration (EIA) puts US distillate stocks at 104.2 million barrels, which is near 40-year lows. [01:16]
• Farmers trying to fill diesel tanks before harvest are now seeing some supply concerns, questioning if they can get diesel when they need it. [01:57]

Trade ideas

• Instrument: Diesel
• Direction: Neutral
• Thesis: The presenter suggests farmers should try to get some coverage for their diesel needs, despite current high prices, due to concerns about potential further price spikes and supply issues.
• Horizon: Short-term
• Conviction: Medium

Levels and data cited

• Diesel (Retail Price): National average at $5.78 per gallon as of Thursday, per AAA.
• Diesel (Resistance): The all-time high hit in 2022 is at $5.82.
• US Distillate Stocks (EIA): 104.2 million barrels.

Risks and what would invalidate this

• Continued war in the Black Sea region.
• Ongoing drone strikes on Russian refineries.
• Extension of Russia's export ban on diesel.
• Supply concerns for farmers during the harvest season.