The benchmark price used for most fuel surcharges fell the most in a week in more than three years.
The Department of Energy/Energy Information Administration average weekly retail diesel price declined 20.5 cents/gallon to $5.403/g. It’s the largest slide since a more than 22-cent decline December 22, 2022.
It’s the second straight week the benchmark price fell after 12 straight weeks of increases.
With the relatively small decline posted a week earlier, that’s 24 cts/g taken off the DOE/EIA price over the two weeks.
Based on what has happened in futures markets in the last two weeks, the decline has room to run given the wild ride in the ultra low sulfur diesel (ULSD) contract on the CME commodity exchange.
After a collapse of 66.6 cents/gallon on April 8 following the announcement of a ceasefire in the Iran war, which was a decline of 14.88%, ULSD settled that day at $3.8084/g.
Since then, there have been three days in which prices declined 17.5%, 21% and 43.6%. But on the other days, the increases were 12.9% (twice), 7.25%, 8% and 14.4%.
The end result is that ULSD Monday settled at $3.5409/g, 26.75 cts/g less than where it was after that enormous April 8 decline. At approximately 12:10 p.m. EDT Tuesday, ULSD was up 14.8 cts/g to $3.6889/g, an increase of 4.18%.
Numerous oil market analysts continue to make the point that while futures markets are highly visible and liquid, a more accurate reflection of where the oil market is today can be found in physical markets, which trade at a premium (or occasionally, a discount) to futures prices.
For example, dated Brent, the physical version of the world’s crude benchmark, reflecting oil to be loaded at various time periods during the next 30 days, traded Monday at approximately $105/barrel, according to various news sources. But the price of Brent on commodity markets, for June barrels, was about $10/b less than that.
Paul Sankey, a well-known oil analyst who now runs a research firm named after him, gave an interview to CNBC Monday in which he discussed that particular disconnect as it impacts the global jet fuel market. The fate of the jet fuel market is of particular interest to consumers of diesel fuel, because diesel and jet fuel are both distillates and tend to move in the same direction relative to Brent, the global crude oil benchmark.
“What you’re seeing here is $200 per barrel jet fuel,” Sankey said of Asian and European prices. “You went into this with under $100 per barrel jet fuel.”
Sankey said European jet demand generally rises by about 40% during summer because of vacation travel, “and I don’t think they can supply that. I think a lot of holidays are going to be cancelled.”
Dan Pickering, the chief investment officer at Pickering Energy Partners, also told CNBC in an interview that if peace talks to end the Iran war are successful, “oil is going down. It is going down a lot.” He said his company’s “expectations” were that crude could drop down to the mid-$70 range. Brent in the futures market settled Monday at about $95/b.
But he cautioned that the oil market “has so much to do to get back to normal.”
“Every day the market continues to tighten, so all of those Asian importers that are fighting each other for crude right now, this is a real, live problematic situation that’s going to continue for a few more months,” Pickering said. “So I think we just have to stop listening to the rhetoric and really start watching the barrels.”
More articles by John Kingston
After CBS report, C.H. Robinson seeks to deflect safety responsibility to FMCSA
California regulators have started a regulatory push on diesel TRU emissions
ATBS: average truck driver earnings in 2025 held mostly stable from ‘24
The post Biggest drop in benchmark diesel price since late 2022 appeared first on FreightWaves.
