BAKU, Azerbaijan, March 12. The U.S. Energy Information Administration (EIA) predicts U.S. distillate fuel inventories will remain low through 2025 and 2026, driven by a combination of decreasing refining capacity and rising consumption, Trend reports.
Total distillate stocks, including petroleum-based distillate, renewable diesel, and biodiesel, are expected to be 8% lower on average in 2025 compared to last year, with a further 4% decline in 2026.
Two U.S. refinery closures in 2025 are expected to reduce refined product output while growing industrial activity and stronger imports of goods - supported by a strengthening U.S. dollar - will increase demand for diesel. As a result, distillate suppliers are likely to draw down on stocks and reduce exports to balance the domestic market. If this forecast holds, total distillate stocks will reach their lowest levels since 2000 by 2026, contributing to tighter market conditions, particularly during peak demand periods like the fall harvest and winter heating seasons. This could lead to higher distillate prices.
Despite rising refining margins, which are expected to climb from 52 cents per gallon in 2024 to nearly 80 cents per gallon by 2026, lower crude oil prices may help mitigate the impact on retail diesel prices. The EIA forecasts average retail diesel prices to fall slightly, averaging $3.60 per gallon in 2025 and just above $3.70 per gallon in 2026.
U.S. distillate exports are also expected to decline in the coming years due to reduced production and higher domestic consumption, reversing the export surge seen in 2024.