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DOE/EIA diesel price down more than 10 cents in on-time release

Drop comes as futures market has reversed sharply and is headed higher

Photo: Jim Allen/FreightWaves

For the first time in four weeks, the Department of Energy/Energy Information Administration (DOE/EIA) benchmark diesel price came out on time.

After three consecutive weeks of delays due to technology issues, the EIA released three weeks’ worth of prices Thursday. But the agency announced on time that the price effective Monday was down 10.7 cents, to $5.558 a gallon.

Combined with the earlier declines the prior two weeks, the benchmark price is now down 24.2 cents a gallon from its most recent high mark price of $5.81 on June 20.

Although the EIA delayed releasing the price for the past three weeks, it was still able to survey the industry and produce a price. 

The latest DOE/EIA price was announced on a day when the diesel futures market veered off on its own course, far from the movement in the broader petroleum market.

While benchmark domestic crude West Texas Intermediate was down slightly, Brent crude was up slightly and RBOB gasoline rose less than 0.5 cents, ultra low sulfur diesel (ULSD) on the CME commodity exchange climbed 9.52 cents on the day, an increase of 2.57%. 

The price settled at $3.7681 a gallon. With big gains in two of the past three days, the ULSD settlement is now up 35.75 cents from its settlement Wednesday of $3.4106. 

The increases Thursday and Monday were both well above the percentage increases — or decreases — posted in the crude and gasoline markets. Additionally, according to benchmark gateway General Index, the spread between the physical Gulf Coast diesel market, which would be for barrels to be delivered in the next few days, and the price on the CME, which is for barrels delivered in New York Harbor in August, rose. That spread of 3.25 cents Monday, up 1.75 cents from Friday and the highest level since early May, is a clear sign of growing physical tightness in the market. 

One possible cause of the increase could be reports that industrial users in Europe, faced with further losses of Russian gas supplies, are looking at oil substitution. A Reuters report Monday cited French industrial companies looking at that option. When that sort of substitution occurs, it is with diesel, not gasoline.

Diesel traders will be closely watching this week’s EIA statistics on diesel inventories. Stocks of ULSD in the U.S. rose for seven consecutive weeks before a small decline in the week ended July 1.

With S&P Global Platts Commodities Insight estimating that total U.S. refinery utilization last week came in at 94.8%, up 0.3 percentage points, refineries are still cranking along at high rates. A decline in inventories could be seen as extremely bullish in a diesel market that suddenly has turned around with a vengeance.

More articles by John Kingston

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Why diesel is more expensive in California than the rest of the US

Benchmark EIA diesel prices delayed again as futures prices plummet

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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.