The benchmark retail diesel price that is the basis for most fuel surcharges had its second-largest one-week slide this year.
The weekly Department of Energy/Energy Information Administration price declined 6 cents a gallon Tuesday to $3.579. Only a 6.2-cents-per-gallon decline on March 3 has been larger in 2025.
So far this year, the DOE/EIA price has risen 10 weeks and fallen five. Since the final price of 2024, the benchmark is up 7.6 cents.
The decline in retail prices, as always, lags movements in futures markets.
On the CME commodity exchange, the price of ultra low sulfur diesel hit a recent low of $2.0464 a gallon Thursday, as all oil prices have fallen in sympathy with the decline in dollar-denominated assets that have gripped markets the past two weeks.
The recent high price prior to that was a settlement of $2.322 a gallon on April 2, for a decline of 27.56 cents in just six trading days.
Prices have risen since the Thursday low, with the ULSD contract settling Tuesday at $2.0874.
Although oil has mostly been along for the ride with the swings in equity and other markets in recent weeks, there are fundamentals to be considered. And a closely watched monthly report on oil supply and demand released Tuesday was decidedly bearish.
The International Energy Agency slashed its estimate for 2025 growth in global petroleum demand to 730,000 barrels a day, a cut of 300,000. That cut of nearly 30% in projected growth is a big move for one month.
Ironically, the cut in the IEA’s demand projection comes as it said first-quarter demand was up 1.2 million barrels a day, which the IEA said was the strongest growth for a quarter since 2023.
But the agency is concerned about what comes between now and the end of the year.
“Growth is expected to slow further in 2026, to 690 kb/d, but risks to the forecasts remain rife given the fast-moving macro backdrop,” the IEA said.
The agency also reduced its estimate for global oil production in 2025, slicing 260,000 barrels per day off its projections. But the forecast now is for growth of 1.2 million barrels a day, far more than the projected increase in demand. For 2026, the 690,000-barrel-per-day projected increase in demand is eclipsed by the IEA’s estimate that supply will rise 960,000 barrels a day.
One set of numbers that the few bulls left in the market continue to cling to are estimates of inventories. The IEA said what it calls “global observed oil inventories” were up 21.9 million barrels to 7,64 billion barrels in February. But the IEA also said that number is “near the bottom of the five-year range.”
The IEA said its preliminary data for March suggested inventories rose last month.
On the supply side, the IEA noted the decision of the OPEC+ group to go ahead with the first steps unwinding production cuts it put in place more than two years ago. The IEA called that decision to move forward a “surprise.”
But the agency also said that given several countries that already are overproducing their quota, including Kazakhstan, the level of increase in May, now set at 411,000 barrels a day, is likely to be less. Countries that are overproducing their quota would not expect to increase their output further as part of the OPEC+ unwinding of its reductions, at least not right away.
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