Biggest downward move in DOE/EIA diesel price since late March

On the same day, the commodity price of ultra-low sulfur diesel takes huge upward move

The weekly Department of Energy/Energy Information Administration average retail diesel benchmark price posted its biggest decline since late March. 

The price posted Monday declined 3.2 cents/gallon to $3.324/gallon. It’s the largest decline since a 3.3 cents drop on March 29, which at that time put the price at $3.161/gallon.

For the fourth week in a row, the DOE posted a price that moved in a different direction than a big move in the price of ultra low sulfur diesel on the CME commodity exchange. The two prices would usually not expect to be related; the survey of retail prices that produces the DOE/EIA price is done during the day on Mondays, and movements in the ULSD price on that day would have no impact on the pump price. 

On Aug. 2, the ULSD price on the CME moved down 2.69%, a significant one-day drop, while the DOE/EIA price moved up 2.5 cents. The following week the DOE price dipped 0.3 cts/g on the same day that ULSD on CME dropped 1.8%, which is considered a large decline. Last week, the CME price declined 1.15%, also a relatively large move, as the DOE/EIA price started to catch up to broader market declines, dropping 0.8 cts/g. It was the largest downward move in four months.

On Monday, the 3.2 cents decline came as the broader commodity market reversed a large amount of the declines it posted last week. The 5.08% increase Monday in the price of ULSD on CME added 9.69 cts/gallon to its price, settling at $2.0051/gallon. That is the largest one-day increase since a 9.29 cts/gallon increase on May 5 of last year. 

Monday’s move put the CME price roughly 4.3 cents less than where it stood at last Monday’s settlement of $2.0483/gallon.

The increase in commodity prices Monday came on the back of a broad rise in asset prices, on equity markets as investors concerns about economic growth appeared assuaged by positive news about the spread of the COVID delta variant in China. That has been a big factor in recent oil market weakness, as fears of slower economic activity leads to fears that oil demand will soften.

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.