Fourth week in a row that DOE/EIA diesel price drops

The latest weekly Department of Energy/Energy Information Administration average retail diesel price dropped 0.5 cents, even as wholesale and commodity prices have jumped significantly.

The latest price, effective Monday, is $3.124 a gallon. It marks the fourth consecutive week that the DOE/EIA price has declined after a record-breaking 20-week stretch of increases. That long run of higher prices added about 80 cents to the benchmark price. Since then, the price has dropped 7 cents per gallon from the $3.194-per-gallon level where it sat at the end of the 20 weeks.

Lower retail prices have come in the past week even as some of the key benchmarks are significantly higher than they were a week ago, primarily on the back of a roughly 8.5-cent increase in the price of ultra low sulfur diesel on the CME Wednesday. 

That increase on Wednesday was driven by several factors. Wednesday is the day that the EIA’s weekly inventory and demand figures are released, and the report was bullish. A sharp decline in U.S. crude oil inventories brought stocks down to their tightest level since February. The report also showed that U.S. gasoline demand is nearing 9 million barrels a day for the first time since the pandemic began.

That increase took the national average wholesale diesel price, as reflected in the ULSDR.USA data series in SONAR, up to $2.06 a gallon from $1.985 as the day began on Wednesday. Most of that increase occurred between Wednesday and Thursday on the back of the higher CME numbers.

Since that big Wednesday price increase, prices for ULSD on CME have mostly stabilized. They climbed as high as $1.8989 a gallon on Thursday but settled Monday at $1.8925.

Despite that, there are two significant bullish factors in the market in recent trading. The U.S. dollar continues to be soft, with the benchmark DXY dollar index sliding from roughly 93.3 at the start of the month to 91.1 in recent days.

The market is also digesting a report from Bloomberg, which crunched the numbers to declare that “the unprecedented oil inventory glut that amassed during the coronavirus pandemic is almost gone, underpinning a price recovery that’s rescuing producers but vexing consumers.”

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