Crude at Street Level
Key Extract
You don't burn crude — you burn what refineries make out of it. Natural gas storage looks healthy, but distillate stocks are 12% below the five-year average and falling, with US refineries already running at 96.5% of capacity.
We've spent a couple of weeks up at the crude level. Barrels in the ground, straits, pipelines. Let's come down to street level today, because you don't burn crude.
You burn what refineries make out of it. Diesel in the trucks that move your groceries. Gas in your tank. Natural gas heating your home.
So what's the situation? Mixed answers. The split is interesting.
First, the good news. Natural gas is healthy. Storage is sitting about 6% above its five-year average, right where you'd want it heading into winter. Record Permian production doing its job. If you heat with gas, this is the one to feel okay about.
Now the bad news. Diesel.
| Fuel | Inventory vs. five-year average |
|---|---|
| Natural gas | +6.4% |
| Propane | +32% |
| Crude oil | -6% |
| Gasoline | -7% |
| Distillate (diesel) | -12% |
Source: EIA Weekly Petroleum Status Report & Natural Gas Storage Report (late Jul 2026)
Distillate stocks are about 12% below the five-year average. And getting worse by the week — it was 10% below just seven days earlier. Harvest season, when farm diesel peaks, is weeks out.
Here's what happened. Russia, the second-biggest diesel exporter on the planet, banned diesel exports on July 8 as Ukraine kept hitting its refineries. Pull the second-largest supplier off the board and every other barrel gets fought over.
US diesel exports just hit the highest level in the history of the data, going back to 2010. We're shipping our diesel out the door as fast as we can make it, because the rest of the world is paying up for it.
US diesel futures jumped 11% to $154 a barrel — an $80 premium over crude itself.
Diesel isn't just a consumer fuel. It's the economy's fuel. Trucks, trains, tractors, construction. When diesel gets tight, it doesn't stay at the pump. It shows up in freight rates, food prices, everything that gets moved or built.
So why don't refiners just make more? They can't.
| Refinery utilization (% of operable capacity) |
|---|
| 96.5% |
Source: EIA Weekly Petroleum Status Report, week ending Jul 31, 2026
US refineries are running at 96.5% of capacity. Normal is around 90%. They're already flat out.
Side note: this is the same pattern we keep seeing at every layer of this market. Crude buffers drained. Diesel buffers drained. Refineries maxed.
As another good side note, the crude coming out of our lease in the Anadarko carries a bit of a premium on it because some diesel can be refined from it.
Your Oil and Gas team, Mike Qu, on behalf of CrownForge Energy.