Diesel Gains 0.5¢ to $3.127, But Wholesale Prices Decline

(Click here for the updated fuel price of Monday, May 17.)

The average national retail price of diesel fuel rose another half-cent last week to $3.127 a gallon, the Department of Energy reported, the 11th increase in the past 12 weeks.

The latest increase put trucking’s main fuel 91.1 cents a gallon above the corresponding week of last year and at its highest level since Oct. 27, 2008, when it was $3.288.

DOE also said that the retail average for gasoline gained 0.7 cent to $2.905, the 10th increase in 12 weeks. The current price is 66.5 cents higher than a year ago.

Diesel now has risen 37.1 cents since mid-February, while gas has gained 29.7 cents. Analysts and a trucking executive, however, all said they expect prices to decline soon.

There will be “plenty of drops in prices coming,” said Tom Kloza, chief oil analyst with the Oil Price Information Service in Wall, N.J.

“Retail gasoline and diesel likely peaked [on May 10], and wholesale prices have plunged by more than 25 cents a gallon,” he told Transport Topics. “We’ll see lower prices in the next month and probably into the heart of the summer.”

One South Carolina trucking executive said he saw what he called the biggest single-day diesel drop ever — 20 cents — in his daily Comdata survey, which fell to $2.78 on May 11, from $2.98 the day before.

“We’ve been in business since 1968, and I’ve never seen a 20-cent drop in one day, which will help our owner-operators and company drivers,” said Mike Gantt, office manager at Charles Gantt Trucking, a refrigerated carrier based in Lexington, S.C.

Gantt Trucking runs about 100 tractors with a mix of independent and company drivers, and Gantt said business at the poultry carrier was booming.

Meanwhile, crude oil prices plunged more than $11 on the New York Mercantile Exchange to near $75 a barrel on May 7, largely on concerns over the global economy and a debt crisis in Europe, Bloomberg News reported.

Crude had closed at more than $86 a barrel on the Nymex several times in April, including an 18-month high of $86.84 on April 6.

Another energy analyst also predicted diesel would decline soon, but he suggested that U.S. exports of refined diesel might have helped hold the price up temporarily.

Pump prices “shouldn’t be going up now for a few reasons,” said Andrew Reed, oil analyst at Energy Security Analysis Inc., Wakefield, Mass.

“Energy refiners are preparing for summer driving season, so they are producing plenty of gas and diesel, and there are already high diesel inventories,” Reed said.

“We’ve been exporting refined diesel to South America, which has caused [domestic] prices to strengthen in the past,” Reed told TT, adding that the Feb. 27 earthquake in Chile had exacerbated the situation.

Crude and distillate inventories both improved in the week ended May 8, with oil rising by 2 million barrels and distillates, which include diesel, gaining 1.4 million barrels. Gasoline stockpiles fell by 2.8 million barrels, DOE said.

In its monthly short-term energy outlook released May 11, DOE boosted its 2010 diesel forecast by a dime to $3.05 a gallon.

Diesel will average $3.08 through June and $3.10 in July — both lower than the most recent weekly price — though DOE said it would rise to peak at $3.16 in September.

Gasoline will average $2.86 this year, up 2 cents from a previous forecast. Last year, diesel averaged $2.46 while gasoline averaged $2.35 a gallon.

Despite the recent crude drop, DOE said global economic growth would lead to higher prices. It boosted the crude outlook by $2 to $84 a barrel in the second half of 2010 and to $87 by the end of next year.

The department said it did not expect “any significant disruptions” to energy supplies because of the big BP oil spill in the Gulf of Mexico following an oil-platform explosion on April 20.