Recent trends in U.S. refined product markets have revealed a complex and confounding interplay between inventory, production, and net exports, offering insight into broader economic signals. Total U.S. gasoline inventories are within the five-year range, while total U.S. diesel inventories are at 20-year lows. For gasoline, under current market conditions, BTU Analytics expects prices at the pump to remain stable this summer due to inventory remaining near the five-year average. However, while both gasoline and diesel prices reflect movement in WTI, there is a disconnect between the price of diesel and current market fundamentals, which suggest diesel prices should be climbing. In reality, though, they are not.
Why diesel inventories are so low
Gasoline and diesel inventories are demonstrating different dynamics. Total U.S. gasoline inventories are just below the five-year average, whereas total U.S. diesel inventories are at their lowest level since April 2005. Gasoline inventories in PADD 2 averaged 1.9 MMbbls above the five-year average year-to-date and would have pushed total U.S. gasoline inventories above the five-year average had they not been partially offset by a refinery outage in California. This outage was caused by a fire in February at PBF Energy’s 157-Mb/d Martinez Refinery that lowered inventory levels in PADD 5 for both gasoline and diesel.
In contrast, total U.S. diesel inventories were further hindered by low levels in PADDs 1 & 3, which have come in well below the five-year average in 2025, allowing for U.S. diesel inventories to hit historic lows.
Production and exports
Total U.S. net gasoline production is on the high side of the five-year range and is largely being offset by higher-than-average net gasoline exports. The higher gasoline production combined with the higher gasoline exports result in a limited impact to U.S gasoline inventories. Total U.S. diesel production, on the other hand, remains depressed, while net exports have recently been exceeding the five-year range. This is likely negatively impacting diesel inventory levels, helping to contribute to 20-year lows.
Where product pricing comes in
Gasoline and diesel prices came down with the oil-price decline in April 2025, when OPEC unexpectedly announced an increased pace of unwinding its voluntary production cuts. Despite 20-year lows in diesel inventories, both diesel and gasoline pricing have remained stable and are mirroring movements in WTI. This shows a disconnect between pricing and the tight fundamentals of the diesel product market, which should be pushing prices higher.
Going forward
With U.S. gasoline inventories, product production, and net exports currently within their typical five-year range, BTU Analytics expects gasoline prices to remain relatively stable in the near term. This suggests that consumers may not see significant relief at the pump this summer, even though WTI prices have recently declined.
Meanwhile, the disconnect between diesel prices and tight market fundamentals may reflect broader economic uncertainty. Diesel is often considered a leading indicator of economic activity due to its central role in freight and industrial sectors. As such, its price behavior could be signaling caution about future demand. Additionally, ongoing uncertainty surrounding global trade policies and tariffs may act as a brake on price increases despite otherwise supportive supply & demand dynamics.
Check back in for more Energy Market Insights from BTU Analytics, a FactSet Company, as we continue to monitor product market developments.
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