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.