On a day when the broader commodity oil markets plummeted, the benchmark Department of Energy/Energy Information Administration average weekly retail diesel price climbed for a 12th consecutive week.
That price rose 0.6 cents, to $3.344 a gallon. That’s the highest level since Dec. 15, 2014. Besides marking the 12th consecutive increase, it also is the 13th week the price didn’t fall. The week prior to the start of the current streak, the price was unchanged.
Whether the price can be up for a 13th consecutive time next week became doubtful, at least for now, following a huge decline in commodity petroleum prices Monday. The ultra low sulfur diesel price fell 12.81 cents a gallon to $1.9852 a gallon, a drop of 6.06%. That is the first settlement below $2 since May 21, and the percentage decline is the largest since several instances of percentage declines that big — and bigger — as the pandemic took hold between February and April of 2020.
What isn’t clear is how much the price of ULSD and other petroleum benchmarks would have declined had there not been a broad delta variant-fueled sell-off in virtually all financial assets Monday.
Oil markets did start the day lower on the news that the OPEC+ group had reached agreement to increase output beginning in August. The failure of the group several weeks earlier to approve that hike in production had lent markets an element of uncertainty that ultimately proved not overwhelmingly bearish or bullish; the global crude Brent benchmark had traded in a relatively tight range of $73 to $77 since the failed meeting over the U.S. Independence Day weekend.
Brent and other benchmarks on Monday declined by levels not seen for months. Brent settled at $68.62 a barrel, a decline of 6.75% to the first settlement less than $70 since the final trading day of May. The domestic benchmark crude, West Texas Intermediate, was down 7.52% to $66.42 a barrel. That is the first sub-$70 settlement since June 9.
While all models show the world needing the crude that OPEC+ agreed to put on the market, the continued spread of the delta variant could mean that the optimistic forecast for growth in world oil output may not come to pass, resulting in demand weakening and all the projected supply not being required. That was a factor driving markets lower Monday.