Diesel Price Dips 0.4¢ to $3.879, Resumes Slide After Two Gains

This story appears in the Dec. 16 print edition of Transport Topics.

U.S. diesel prices dipped 0.4 cent to a national average of $3.879 a gallon, ending two weeks of increases that were the fuel’s only upturns in the past three months, the Department of Energy reported Dec. 9.

Gasoline prices also fell slightly, with the national average down 0.3 cent to $3.269 a gallon, marking the second straight decline following two weeks of gains.

Last week’s average diesel price was 11.2 cents below the corresponding week last year, while gas was 8 cents less than a year ago, DOE said following its weekly survey of filling stations.

Gasoline has slipped 2.4 cents in the past two weeks after gaining almost a dime in the previous two.

“We’re witnessing a slow downward trend in world crude oil prices, primarily due to higher U.S. production, and that’s leading to lower diesel and gasoline prices,” Sean Hill, an analyst in DOE’s Energy Information Administration, said after the report’s release. He said that globally traded Brent crude oil prices have fallen about $2 in the past month.

Crude oil, meanwhile, pushed past $98 a barrel last week for the first time in six weeks as supplies declined by 10.6 million barrels in the week ended Dec. 6.

Oil climbed more than $1 to $98.51 a barrel on the New York Mercantile Exchange on Dec. 10, and the price has risen more than $6 in the two weeks since Thanksgiving, Bloomberg News reported.

In a separate report, DOE projected that diesel’s average pump price will drop by 15 cents next year to $3.77 a gallon, down from this year’s $3.92 average.

That’s because U.S. oil production is projected to push past its current high levels, according to DOE’s monthly short-term energy outlook released Dec. 10.

“Diesel’s prices are lower than we saw last year, and we’re seeing more refiners investing in their diesel output, because they’re making more money on diesel than gasoline, both for the U.S. market and for export,” DOE’s Hill told Transport Topics.

DOE’s weekly inventory report released Dec. 11 said that U.S. refinery rates were holding at more than 92%, “which is extremely high for this time of year,” he added.

Oil production averaged 8 million barrels per day in November — the highest monthly level in 25 years — and the outlook predicted that rate will rise to 8.5 million barrels per day in 2014, a 6.3% increase.

Crude prices will decline to $93 a barrel by the fourth quarter of next year, from $96 in the first quarter, the report said. Oil held at more than $100 a barrel most of this summer into October, before slipping into the $90 range.

Diesel has averaged $3.93 a gallon this year through November, and gasoline has averaged $3.53.

Last year, diesel averaged $3.97, and gasoline averaged $3.63.

Prices have declined in the past few months, with diesel dropping about a dime and gasoline down more than 30 cents since Labor Day. DOE projected that gasoline’s average price will drop a dime next year to $3.43.

An executive with a New Jersey drayage hauler said last week that prices have held fairly steady recently, and he noted they were down about 20 cents from the first quarter.

Bayonne, N.J.-based Mecca Trucking does the majority of its fueling with an on-site 3,300-gallon tank, said General Manager Anthony Hodge.

The carrier is paying about $3.48 a gallon this quarter, down from $3.65 earlier this year, Hodge told TT. New Jersey has generally low fuel prices because of its in-state refineries.

“We’ve got some new trucks that are getting better fuel mileage,” Hodge said, adding that Mecca primarily runs drayage routes in and out of the Port of New York and New Jersey, the East Coast’s biggest port.

Mecca’s trucks run as far north as New England and south to North Carolina, and the carrier sets its speed governors at 72 mph to save fuel on its over-the-road runs, Hodge added.

In a separate report last week, DOE said that distillate inventories, which include diesel and heating oil, increased by 4.5 million barrels for the week ended Dec. 6.

Gasoline supplies also rose, gaining 6.7 million barrels, DOE said in its weekly inventory report released Dec. 11.

Both increases were more than triple the gains forecast by analysts, Bloomberg reported. The 10.6 million-barrel crude oil-supply decline was more than triple the drop forecast.

“The distillate build signals ample supply, which could lead to more price drops,” DOE’s Hill said, adding that the overall level of about 120,000 barrels was comparable to a year ago.