DTN Oil Update
ULSD Futures Fall 4% After US-Russia Diesel Deal
HOUSTON (DTN) -- Crude oil futures edged down to close the week on Friday, while ultra-low sulfur diesel (ULSD) futures dropped over 4% after U.S. President Donald Trump announced an energy deal with Russian President Vladimir Putin to supply 300,000 tons of diesel to the United States and global markets.
According to President Trump's social media Truth Social, the deal also comprises "another 500,000 tons during the month of November, and 1 million tons immediately thereafter."
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In response to the announcement, ULSD futures settled at $4.73 gallon, down $0.2271, or 4.61%, from the prior day.
Friday's announcement followed the Trump administration's recent proposal to ban on U.S. diesel exports to preserve domestic supplies and lower prices at the pump, as refiners have prioritized sales abroad.
This week, the Energy Information Administration reported U.S. distillate fuel inventories were steady at 105.1 million bbl week on week, after falling 2.3 million bbl the previous week. Distillate supplies stood at 16.4 million bbl, or 13.5%, below the 121.6 million bbl reported in the same week last year. Distillate imports fell to 118,000 bpd from 153,000 bpd, while exports increased to 1.764 million bpd from 1.529 million bpd.
The bearish sentiment in the oil futures market was also fueled by news that China was reportedly set to lift a de-facto fuel export ban that had rattled already supply-starved markets. The country did not grant any refined fuel export quotas for the duration of its week-long national holiday at the beginning of October. Canceled cargoes and the lack of communicated timeline had market participants concerned about yet another global fuel supply source drying up.
Market participants were also focused on Hurricane Isaias, which on Thursday, Oct. 8, forced shut operations at 130 U.S. offshore platforms, affecting around 1.3 million bpd of crude oil production. The first Hurricane of the season is expected to make landfall late Friday or early Saturday. On Friday, BP suspended production at its Na Kika and Thunder Horse offshore platforms in the Gulf of Mexico. The operator also removed nonessential personnel from its Argos, Atlantis and Mad Dog platforms, although production shutdowns were not reported at those facilities.
Upstream, the front-month NYMEX WTI futures contract price edged down $0.21 to settle at $91.85. ICE Brent for December delivery was also down by $0.28 to close at $104.72. Meanwhile, the front-month RBOB futures fell $0.0455 to $3.2952 gallon.
The U.S. Dollar Index strengthened by 0.095 points to 102.025 against a basket of foreign currencies.
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