DOE/EIA diesel price falls for second consecutive week

The Department of Energy/Energy Information Administration average diesel price fell for the second consecutive week, effective Monday.

A decline of 1.7 cents a gallon to $3.144 a gallon followed last week’s 3.3-cent decline, a drop that ended a 20-week streak of increases. Even with the two recent declines, the benchmark price is still up 50.9 cents a gallon from where it closed out 2020.

The decline in the DOE/EIA retail price did not come from a steady decline last week in the ultra low sulfur diesel price on the CME commodity exchange. To the contrary, the CME price settled the week at $1.8316 a gallon on Thursday (markets were closed Friday to mark Good Friday), which represented a gain of slightly more than 2 cents a gallon from the prior Friday. 

Oil markets counterintuitively rose Thursday, the day that the OPEC+ group decided to put a significant amount of oil onto the markets starting this month. But prospects of continuing vaccination troubles in Europe and what that might mean for demand reversed most of those gains on Monday, with the price of ULSD settling down almost 6 cents a gallon from Thursday to $1.7724. 

But retail prices in recent weeks had started to rise substantially above where wholesale prices would have otherwise dictated they would be expected to land, which can be seen in the FUELS.USA SONAR data stream, which measures retail to wholesale diesel prices.

That price tends to have a normal range of about $1.05 to $1.10. The drop in retail prices that the EIA captured this week, during a period when wholesale diesel prices largely held steady last week, is reflecting more of a return to the norm for retail against wholesale.

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