The benchmark diesel price used to set most fuel surcharges fell to its lowest level since September 2021 on Monday.
The latest average weekly retail diesel price released by the Energy/Energy Information Management Department is $3.451 per gallon. It's down 3.6 cents from the previous week and now it's down seven in the past eight weeks.
On September 20, 2021, the price released is $3.406 per gallon. Each price has since been higher than the price released this week. The next lowest was late last year, when the price of $3.458 per gallon was released on December 9.
These declines offset two weeks ago with a 6-cent increase two weeks ago, with DOE/EIA prices falling 18.8 cents per gallon since the release of $3.639 on April 7.
The latest price reduction is in the context of futures trading on the CME Commodity Exchange in Ultra Low Sulfur Diesel (ULSD), which has been on a downward trend for the past three weeks, and although the first two days of trading this week were significantly higher, the retail price has not yet appeared.
From the latest May 14 ULSD settlement at $2.2061 per gallon, two steps back and one step forward to lower ULSD to $2.0172 on Friday.
Despite news over the weekend that OPEC+ Group will increase 411,000 barrels in July, while another lasted for several months, futures prices have risen, with OPEC+ Group increasing output by 411,000 barrels a day while another batch increases. At this rate, by 2023, OPEC+'s 2.2 million barrels per day output will be fully unraveled in the fall.
The ULSD weekly price was $2.0445, which rose by 2.73 cents per gallon despite the increase. Prices rose again Tuesday, dropping 5.54 cents to $2.0999 per gallon.
Despite the increase in the past two days, the bigger picture for U.S. diesel is as demand is not only weak but continues to decline in the near term.
Compared with the data of the past 10 years of the corresponding time at the end of May, the decline in diesel consumption is significant.
According to the latest EIA report, consumption of non-Jet fuel distilleries approached 90% of the ULSD category in the week ending May 23 was 3.65 million barrels. This is the third consecutive year that demand figures last week were less than last year.
Whether it is due to rising intermodal services, better diesel engine efficiency, converting heated oil use to natural gas (because heated oil is in this number), or a series of relatively warm winters in the northeastern United States, heating oil is the fuel of choice, and the demand chart is the final average of the final weekly EIA EIA 2.92 million bars for May 10. Between 2015 and 2018, weekly demand for non-Jet distillates in the U.S. period is 4 million barrels per day.
In recent days, this weakness has increased the spread between ULSD and the world crude oil benchmark Brent to about 50 cents a gallon. Outside of March days, the spreads this year are often above 50 cents and worth more than 60 cents in early 2025 (however, the figures from last year’s 40s were happening quite often.)
The weaker difference means diesel has dropped sharply in recent weeks, and the crude oil market has not seen yet. Brent's settlement fell 2.2% during the week due to the recent May 14 high, but ULSD fell 7.3%.