Platts assesses Gulf Coast ULSD above $5/gal for first time

Platts, part of S&P Global Energy, assessed US Gulf Coast ultra low sulfur diesel at $5.0125/gallon on Sept. 10, its highest value since the assessment began in May 2006, eclipsing the previous high of $4.816/gal set the day before.

The 19.65-cent/gal increase was driven by a rally in the underlying NYMEX October ULSD futures contract, which broke the $5/gal level and climbed to $5.0575/gal, just shy of the all-time high of $5.135/gal recorded in April 2022.

This rally was supported by escalations in the US-Iran conflict and signs of tightening physical supply, both of which have kept a risk premium firmly priced into the market.

Despite its historical importance, the hurricane risk is, as one market participant put it, something "no one is talking about. [Iran has] been hogging headline space."

USGC refiners have benefited from a comparatively mild Atlantic hurricane season that has so far produced just five named storms and zero hurricanes. Sept. 10 marks the historical peak of Atlantic storm activity, according to the US National Hurricane Center.

"I don't think anybody cares about hurricanes right now," a second market source said. "It's a non-event this year."

The quiet hurricane season has not allowed refineries to build a stockpile of diesel able to absorb a hurricane-induced supply shock; nationwide ULSD stocks stood at 96.4 million barrels in the week ended Sept. 4, about 16 million barrels below the five-year average, according to Energy Information Administration data released on Sept. 10.

Crack spreads incentivize intense refinery activity

The record diesel price reflects a market with supply stretched thin, even with US refineries running at high levels.

Diesel remains the refined product with the highest crack spread, meaning refiners are heavily incentivized to maximize its output.

Domestic diesel production rose to 5.11 million barrels/day during the week ended Sept. 4, the highest since July, EIA data showed. The EIA also reported a 1.1 percentage point increase week on week in diesel refinery product yield to 30.4%, highlighting the industry's shift toward diesel.

Platts recorded the highest prompt pipeline ULSD WTI front-month crack at $102.187/b on Sept. 10, marking a record since Platts began publishing the assessment in 2009.

Despite the record-high prices for Gulf Coast ULSD, the export arbitrage to Northwest Europe remained workable, with a $3/b incentive on Sept. 9, according to the latest Refined Products ArbFlow Report.

US average exports in 2026 are already 10% higher than in 2025, data from the EIA showed. Refining utilization so far in 2026 has averaged 93.5% of capacity, up from 90.7% in 2025. Some refiners, such as PBF Energy Inc., have even postponed planned maintenance to capture the strong margins.

With these open arbitrages, S&P Global Commodities at Sea data showed that the 30-day load pace for gasoil and diesel stood at a record 53.3 million barrels. September alone has already seen 17.8 million barrels loaded, setting the stage to surpass August's record exports if the export incentives persist.