Opportunity to short distillate cracks?

SFOT is a little tied up this am, and thus the post is lat and will be a short one. Gasoline cracks have eased off since DOE came out yesterday confirming the relative increase in inventories. Indeed, days forward cover of Gasoline is now starting to reverse a little. However, what bothers SFOT is that demand is also on the way up, which means prices at current retail level has not hurt US consumers just yet. Perhaps it is substitution of flying holiday with driving holiday in the US at work and we are indeed seeing evidence of this from the airline industry and Jet fuel's relative prices. SFOT's decision to be flat of any Gasoline length proved to be right, but going short is a nono just yet.


However, distillate cracks are high, and with days forward cover on its own reaching another high, SFOT cannot see this strength continue for much longer, and will add a unit of short in this area. This is especially the case when crude stocks are being drawn down and the balance of play is probably now to be long of crude and short of distillates, and long of crude spreads vs short of distillate spreads on weakness.