The first 2022 move in the weekly Department of Energy/Energy Information Administration retail diesel price was in the same direction as the six weeks that closed out 2021: downward.
However, at .02 cents per gallon, the move in the benchmark price was the smallest of any of the seven consecutive declines. And given recent trends in the market, it’s possible that it may be the last in this current run of lower prices.
The latest price reported Monday by the EIA at $3.613 a gallon is the lowest since the $3.671 reported Oct. 18. It also represents a full-year 2021 upward move of 97.3 cents per gallon, as the first number reported by the EIA last year was $2.64 a gallon.
The seven-week slide continues to be the longest series of declines since an epic 19 weeks of declines at the start of the pandemic.
Even as the benchmark number for the trucking industry was declining again, broader market trends appear to be pointing higher.
The ultra low sulfur diesel (ULSD) price on the CME commodity exchange settled Monday at $2.3574 a gallon, a level that was barely changed from a week earlier. But during that week, prices were higher on four consecutive days before a big drop Friday — New Year’s Eve — wiped out much of that increase. But on Monday, that CME ULSD settlement marked a 1.17% increase from Friday, moving 2.73 cents higher.
Oil markets are closely watching meetings of the OPEC+ group this week. It is scheduled to again put 400,000 barrels per day of new crude supply on to the market, which it has been doing since last spring as it unwinds the cuts it made when the pandemic first hit oil demand.
But reports from the runup to the meeting were clearly bullish. While the 400,000-barrel-per-day increase is expected to go through — it was questionable a month ago, when news of omicron was still fresh — it may not be enough of an increase to significantly build depleted world inventories given changes in supply and demand.
Market bears for months have been pointing to supply/demand forecasts for the first half of this year that showed oil markets to be in significant surplus. But reports said OPEC’s research team on Monday reduced its forecast for market oversupply to 1.4 million barrels a day for the first quarter, down significantly from estimates of just a month ago.
Part of the reason for that drop is OPEC’s estimate that the omicron variant is going to have relatively limited impact on demand. According to a report by S&P Global Platts, one delegate said of the OPEC forecast: “No major evidence on omicron impact to demand. So far, so good.”
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