Column: U.S. diesel shortage shows economy hitting capacity limit

LONDON, Aug 4 (Reuters) – U.S. distillate fuel oil inventories are depleting to critically low levels; either an imminent recession reduces consumption or prices are likely to surge higher.

Distillate fuel oil is the lifeblood of industry and the worsening shortage shows the economy is hitting hard capacity constraints in the short term.

Stocks of diesel, heating oil and other distillate fuel oils fell by more than 2 million barrels to 109 million barrels last week, according to data from the U.S. Energy Information Administration (EIA).

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Distillate inventories have declined in 66 of the last 109 weeks by a total of 65 million barrels since the start of July 2020 (“Weekly petroleum status report”, EIA, Aug. 3).

The drawdown has more than offset the 45 million barrels accumulated in the second quarter of 2020 when consumption was hit by the first wave of the coronavirus and widespread…

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