Crude has spent six weeks in a narrow band. Distillate cracks, over the same period, pushed to multi-month highs. When those two decouple, the story is almost always refining capacity rather than crude supply.
Atlantic basin refining capacity has shrunk through a series of closures and conversions, several of them to renewable diesel, which does not produce the same slate. Capacity added in the Middle East and Asia is real but sits on the wrong side of freight economics for European demand.
Nobody riots over crude. They riot over diesel.
Distillate is the fuel of freight, agriculture, construction and backup generation. Its price transmits into the general price level faster and more broadly than gasoline does, and with less political visibility until it has already happened.
Inventory cover in days of demand is the number to watch, not absolute barrels. Absolute inventories look adequate. Cover does not.
