Oil Price Analysis: Why Diesel Margin Could Send WTI Back to $90
By Navnoor Bawa | Updated: August 26, 2026
Key Insights
The article discusses the current state of oil prices, particularly focusing on the diesel margin and its potential impact on West Texas Intermediate (WTI) crude oil prices. As of August 18, the New York Harbor diesel crack spread reached $104.62 per barrel, marking it as the 21st highest reading since 2006, with all higher readings occurring in 2022.
Between August 5 and August 18, crude oil prices increased by 12.6%, while diesel prices surged by 19.1%. This significant rise in diesel prices has widened the crack spread, indicating that the refined product is currently influencing the price of crude oil.
Current Inventory Levels
As of the week ending August 14, crude oil inventories stood at 428.8 million barrels, aligning with the five-year average. In contrast, distillate inventories were at 105.6 million barrels, which is 12.8% below the average. This disparity in inventory levels suggests that while crude oil is relatively abundant, diesel is in shorter supply, further supporting the argument that diesel margins could drive WTI prices higher.
Market Movements
Despite the bullish sentiment surrounding diesel margins, WTI crude oil prices have recently experienced a decline. As of August 25, WTI settled near $82.40 and traded around $80.50 the following morning, reflecting a drop of over 5% in just two sessions. This decline is attributed to discussions regarding a potential interim shipping corridor through the Strait of Hormuz, which could impact supply dynamics.
The author notes that the market is currently testing a critical level at $80.91, which serves as an invalidation point for the bullish outlook on crude oil. The article emphasizes that the demand for crude oil is now heavily influenced by refinery gate prices, and any significant changes in diesel margins could lead to a resurgence in WTI prices, potentially pushing them back to $90.