DOE/EIA diesel price ekes out 20th consecutive weekly increase

Some data had been suggesting a decline was likely but the survey showed a small upward movement

The weekly Department of Energy/Energy Information Administration retail diesel price managed a small gain in the price published Monday, the 20th consecutive week it has gone up.

The 20-week streak is now long past the previous record of 15 consecutive weeks. The increase for this week was 0.03 cents per gallon, the smallest one-week increase in the 20-week run since a 0.5-cent increase in the first week of 2021. 

The 20-week run of increases has now added 82.2 cents a gallon to the price, which is the basis for most fuel surcharges. The last price posted before the 20-week run began was $2.372 on Nov. 2.

Data had pointed to the possibility — even the likelihood — of a decrease in the price, which is produced through a one-day survey on Mondays (Tuesday if Monday is a holiday). The DTS.USA data series in SONAR had recorded a decline through Sunday, dropping to $3.245 a gallon from $3.266.

But more striking has been the way retail prices are holding up even as wholesale prices decline. The national average wholesale price found in ULSDR.USA in SONAR fell to $2.038 a gallon on Monday from $2.22 a week earlier. The spread between retail and diesel prices can be found in FUELS.USA, and that number has moved up 23 cents since March 6, as retail prices have not captured anywhere near the decline in wholesale prices.

Retail prices always lag increases or decreases in wholesale prices. Whether they are slower to react on the downside has always been a subject of some debate.

The FUELS.USA dataset reflects whether retail prices are leading or lagging. The data shows several periods in the past six months during which the spread fell to less than $1 a gallon, a sign of retail lagging. A decline to less than $1 is infrequent. 

By contrast, at the start of the pandemic when oil prices were getting walloped, the retail price of diesel got as high as $1.67 a gallon more than the wholesale price, according to FUELS.USA.

Commodity oil markets have slid in the past two to three weeks on several factors. A strong dollar driven by higher interest rates has been a bearish factor in the price of oil, as it usually — but not always — is. Financial markets have been choppy and oil has tended to move in tandem with other asset classes. And while inflation fears have been a key factor in markets in recent weeks, they have not impacted oil despite the fact that oil prices would be assumed to increase in a period of inflation. 

OIl prices kicked off the week slightly higher, with ultra low sulfur diesel on the CME commodity exchange rising 0.77 cents a gallon, to $1.8293, a 0.42% increase. That price is a little less than 14 cents below the recent high of $1.9675 a gallon. The commodity markets and wholesale markets suggest retail diesel could be headed for a fall, but so far, at least according to the DOE/EIA number, retail levels don’t want to change direction yet.

More articles by John Kingston

Diesel’s decline Thursday one for the ages; biggest in almost six years

OPEC stuns by opting not to raise output; was diesel a reason?

Reflecting strong trucking market, TA sold huge amounts of diesel in Q4 2020

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.