The benchmark diesel value used to set most gas surcharges fell Monday to its lowest stage since September 2021.
The newest common weekly retail diesel value printed by the Division of Vitality/Vitality Info Administration is $3.451 a gallon. It was down 3.6 cents per gallon from the prior week and has now declined seven of the previous eight weeks.
On Sept. 20, 2021, the value posted was $3.406 a gallon. Each value since then has been increased than what was posted this week. The subsequent lowest got here late final yr, when a value of $3.458 a gallon was posted Dec. 9.
These declines, offset partially by a 6-cent achieve from two weeks in the past, have taken the DOE/EIA value down 18.8 cents a gallon for the reason that decline began after an April 7 posting of $3.639.
The newest discount in value comes towards a backdrop of futures buying and selling on the CME commodity change in extremely low sulfur diesel (ULSD) that has been totally on a downward development for nearly three weeks, although the primary two days of buying and selling this week had been considerably increased however wouldn’t be exhibiting up but in retail costs.
From a current Could 14 excessive settlement of ULSD at $2.2061 a gallon, two steps backward and one step ahead introduced ULSD right down to a settlement of $2.0172 on Friday.
Futures costs moved up Monday regardless of the weekend information that the OPEC+ group would enhance output in July by an extra 411,000 barrels a day, one other in a sequence of will increase of that magnitude which were happening for a number of months. At this fee, the two.2 million-barrel-per-day output lower OPEC+ has had in place going again in items to 2023 may have been fully unwound by the autumn.
ULSD settled at $2.0445 on Monday, a achieve of two.73 cents per gallon regardless of the rise, which had been anticipated. Costs Tuesday rose once more, settling up 5.54 cents to $2.0999 a gallon.
Regardless of the will increase prior to now two days, the bigger image for U.S. diesel is that the market is being weighed down relative to the crude market by demand that’s not simply weak within the brief time period, however is constant a now-multiyear decline.
The decline in diesel consumption in comparison with the previous 10 years of knowledge for the corresponding time on the finish of Could is stark.
Consumption of nonjet gas distillates, a class that’s virtually 90% ULSD, was 3.65 million barrels a day within the week ended Could 23, in response to the newest weekly report of the EIA. It’s the third consecutive yr that the demand determine for the final week of Could was lower than within the prior yr.
Whether or not it’s due to upticks in intermodal service, higher diesel engine effectivity, conversion of heating oil utilization to pure gasoline (as a result of heating oil is in that quantity) or a sequence of comparatively heat winters within the U.S. Northeast the place heating oil is the gas of alternative, the demand determine stands in stark distinction to the 10-year common for Could’s closing weekly EIA report of three.92 million barrels a day. Between 2015 and 2018, weekly U.S. nonjet distillate demand commonly topped 4 million barrels per day.
The weak spot has pushed the unfold between ULSD and world crude benchmark Brent to about 50 cents per gallon in current days. Outdoors of some days in March, that unfold has commonly been properly above 50 cents this yr and was greater than 60 cents firstly of 2025. (Nonetheless, numbers within the 40s had been common occurrences final yr.)
The weakening unfold means diesel has been on a steeper decline in current weeks that has not been seen in crude markets. Since that current Could 14 excessive, Brent was down 2.2% by means of the Monday settlement, however ULSD is down 7.3%.