DOE/EIA diesel price up for 9th straight week

Retail prices are rising even as commodity prices have turned downward

It’s now been nine weeks since the benchmark Department of Energy/Energy Information Administration weekly average retail diesel price posted a decline. 

The benchmark number was up again this week, posting an increase of .04 cents per gallon Monday. Since its latest decline, a drop of just .01 cents per gallon on Sept. 13, it is up 36.2 cents a gallon. 

The price also has been up in 11 of the past 12 weeks.

The increase came as retail markets continue to catch up to earlier increases in spot prices. The price of ultra low sulfur diesel on the CME declined last week. The Monday settlement of $2.3981 a gallon was down 6.9 cents from where it settled last Monday.

The DOE/EIA price posted Monday is the highest since Oct. 8, 2008.

Market speculation that the Biden administration will release crude oil from the U.S. Strategic Petroleum Reserve has already been “baked into” the current commodity price for crude oil and products, according to analysts quoted in various market reports. The belief is that a release of oil from the SPR won’t do much to drive down prices now but may keep a lid on further increases.

Debating about whether SPR releases have any impact over time is one of the great parlor games in oil markets. The difficulty is always in separating out the threads of why a market goes up or down, and whether it would have done so to the same deegree if there had not been any oil released out of the SPR. 

The SPR currently holds just more than 600 million barrels. Current U.S. consumption generally comes in at 19.5 to 20 million barrels/day.

The continued increase in the retail price of diesel while commodity and wholesale prices continue to fall means an increase in wholesale margins, reflected in the FUELS.USA data stream in SONAR. At roughly $1.09 a gallon, that level on a nationwide basis has been rising but is still far from all-time highs. That spread this year has been as high as $1.25 a gallon and as low as 78 cents per gallon. 

To learn more about FreightWaves SONAR, please go here.

Between Sept. 9 and Oct. 20, the price of ultra low sulfur diesel on CME rose more than 48 cents, a rapid rise in spot markets that is rarely matched by increases that much in retail markets. And they weren’t: Retail prices per the DOE/EIA price were up only about 21 cents during that period. That sort of lag inevitably reverses itself, and that’s visible now in the higher numbers in the FUELS.USA series and the fact that the benchmark DOE/EIA price continues to rise even as commodity and wholesale numbers are falling.

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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.