Crude Oil Drops On Trump's Russian Diesel Plan

After a call with Russian President Putin, President Donald Trump said on Friday Russia will immediately supply more than 300K tons of diesel to the US and global markets. He put the next shipments at 500K tons in November and 1 million tons after that. The first 300K tons come to about 2.2 million barrels, a little more than half a day of US demand for distillate fuels, which are mostly diesel.

Treasury's Office of Foreign Assets Control (OFAC) issued General License 135 the same day, allowing the sale and import of Russian diesel, including into the US, until April 7, 2027. It's the second diesel move President Trump has pushed in a week, after EU countries agreed on October 2 to a French proposal to release diesel stockpiles at his request.

New York diesel futures are near $4.67 a gallon after dropping again on the post, and have given back most of Thursday's rise. That's close to $196 a barrel against WTI near $90.50, a margin of more than $100 on the diesel US refiners make. Russian cargoes compete with that diesel, and a smaller margin gives refiners less reason to pay up for WTI.

Spot WTI fell from near $91.00 to just under $90.00 in the two five-minute bars after the post, giving back about three-quarters of its climb from the session low just under $89.50. The drop came from the second of two highs that both stopped short of $91.50.

On the charts

WTI has recovered to near $90.50 since then and is in the middle of the session's range between $89.50 and $91.50. Intraday momentum went from overbought to near oversold in the drop and is still falling.