The benchmark Department of Energy/Energy Information Administration weekly diesel price has now risen for 11 consecutive weeks.
In the latest update, posted effective Monday, the price rose 0.07 cents per gallon to $3.338. The increase came after a week of a wild ride in the world’s oil markets reacting to an OPEC+ meeting July 5 that failed to reach agreement on increasing output in August and beyond, as most models are saying needs to be done to keep the market in balance.
The end result was a week in which prices plummeted Tuesday, the day after the meeting of the OPEC+ group broke up without resolution, climbed back for a few days but ultimately saw the commodity price for ultra low sulfur diesel on Friday close the week down 2.39 cts a gallon on Friday compared to the prior Friday. The settlement this past Friday was $1.552 a gallon.
ULSD on the CME commodity exchange Monday declined another 0.54 cents, settling at $2.1498 a gallon.
The swings during the prior week and the overall lower trend resulted in the national wholesale diesel price measured by the ULSDR.USA data series in SONAR dropping about 1.8 cents between Tuesday and Monday. Despite that, the average retail price measured by the DOE rose, not all that surprising given that wholesale-to-retail spreads have been trending below normal levels and were due to bounce back.
The failure of OPEC+ to come up with a plan for future output increases has not changed since the meeting broke up; there are no further meetings planned. But the fear that a failure to act might create short supplies through the rest of the year has been offset by concerns that the continuing spread of the delta variant will hamper the return to economic normalcy around the world, particularly in Asia.
With each increase in the DOE/EIA price, the calendar “reach back” goes a little further. The July 12 price is the highest since the price was $3.419 a gallon on Dec. 15, 2014, when oil markets were in the early stages of a decline that began that fall and bottomed out in early 2016.