The benchmark diesel price used for most fuel surcharges dropped in excess of 4 cents/gallon for the third consecutive week, with the price at the pump catching up to significant declines in futures prices from several weeks ago.
The Department of Energy/Energy Information Administration average weekly retail diesel price fell 4.5 cts/g to $4.62/g, effective Monday but released Tuesday. It is the latest price in a three-week decline that has taken the benchmark price down 13.4 cts/g during that time.
With the decline, the DOE/EIA price is at its lowest level since a posting of $3.571/g on June 16.
While the futures price of ultra low sulfur diesel (ULSD) on CME has traded in a narrow range in recent days, the three weeks of decline in retail prices reflected in the DOE/EIA number comes after a significant slide in the ULSD market.
The ULSD settlement Monday actually rose slightly from Friday. At $2.1921/gallon, it is well above the sub-$2/gallon prices set for a few days in May.
But it’s also well below the recent high settlement of $2.4289/g recorded on September 26. The ULSD price on Tuesday continued to decline, down roughly 80 basis points at 10:40 a.m.
There has been little news to drive oil markets. But the fact that ULSD, the engine of economic growth, barely moved in the past week even as equity markets have been mostly higher, though with some pullbacks, is an indication that fears of an oil market glut, given forecasts of supply and demand into 2026, remain the driving force in oil markets.
Those glut fears are visible more in the crude market, since that is where an imbalance is likely to show itself.
The settlement price of $61.01 for global crude benchmark Brent was the lowest since a $60.23 settlement on May 5. But prior to that, Brent hadn’t settled as low as it did Monday since March 2021.
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