Diesel Gains 5.4¢ to $3.677
By Jonathan S. Reiskin, Associate News Editor
This story appears in the Nov. 17 print edition of Transport Topics.
The national average diesel price rose last week for the first time since June, jumping 5.4 cents a gallon to $3.677, led by a hefty leap in the Midwest, the Department of Energy said.
The 15 states in the Midwest saw fuel prices jump by 16.4 cents to $3.788, DOE’s Energy Information Administration said after its Nov. 10 survey. The region’s inventory of distillate stocks declined steadily throughout October, attributed to harvest-related demand for fuel.
“I think the price increase will be short-lived and diesel will resume a downward trend,” said Denton Cinquegrana, chief oil analyst for the Oil Price Information Service. He said the agricultural issues in the Midwest drove the overall weekly increase.
Stocks of distillate fuels in the Midwest fell to 23.1 million barrels Nov. 7 from 30.1 million on Oct. 3. The Associated Press reported last week that 22 states anticipate historic corn yields this year, contributing to what is expected to be a U.S. record.
In contrast, the 17-state East Coast region saw its average diesel price for the week drop by 2.9 cents a gallon to $3.568.
The highest level for the national average in 20 months was $4.021 on March 10. From that point, the price had declined in 29 of 35 weeks, hitting a low of $3.623 on Nov. 3, or 9.9% off the peak. A year ago, the diesel average was $3.832, or 15.5 cents a gallon higher than last week’s price.
Diesel fell for eight straight weeks prior to the current increase. The price held steady for one week in early September, but other than that it has been declining since June 30.
Gasoline, meanwhile, continued to drop, slipping 5.2 cents a gallon for the week to $2.941, the lowest level since Thanksgiving 2010, EIA said.
The gasoline average has declined in 17 of the past 19 weeks since early July, including the past six weeks straight. On June 30, the average was $3.704, so the most recent price is a 20.6% reduction since midyear.
A year ago gasoline cost $3.194 a gallon.
As for future prices, EIA offered some predictions Nov. 12 in its monthly Short-Term Energy Outlook, saying diesel will decline further to a 2015 average price of $3.38 gallon.
Gasoline will remain around $2.94, on average, next year, EIA said. The report also said both major crude oil benchmarks should have an average price near current levels: $77.75 a barrel for the New York Mercantile Exchange and $83.42 for London Brent.
On the Nymex oil market, the price of a barrel remained below $80 for nine trading days through Nov. 13, when it closed at $74.21. The drop in oil prices has been more pronounced than retail diesel. This year’s peak for Nymex crude was $107.26 on June 20, making for a 28% plunge in less than five months.
The price for oil in London is at a similar level, closing at $80.38 a barrel on Nov. 12, down from a 2014 high of $115.06 a barrel on June 19.
The decline in U.S. oil prices has been widely attributed to the production boom in domestic oil in places such as North Dakota and Texas.
According to EIA’s Short-Term Energy Outlook, domestic production will be about 8.6 million barrels a day this year, up from 6.5 million in 2012. The forecast for next year is 9.42 million barrels a day.
Total oil consumption is rising more slowly, according to the Short-Term Energy Outlook, to 19.1 million barrels a day next year from 18.5 million barrels in 2012.
Bloomberg News reported that users of Brent crude are benefiting because most OPEC members, especially Saudi Arabia, are not cutting back on production, even as prices decline.
“The evidence is abundant that OPEC needs to take oil off the market to support prices, but there’s no evidence that they are going to take the action needed to accomplish that task,” Tim Evans, an energy analyst at Citi Futures Perspective, told the wire service.
