Less Volatility in Diesel Prices Expected in 2024
[Stay on top of transportation news: Get TTNews in your inbox.]
Motor carriers can expect lower prices and less volatility at diesel pumps in 2024, according to experts. The forecast stands to replicate a pattern seen during 2023, when fuel prices stabilized after experiencing a stretch of unpredictability.
“I would hope 2024 will be a gentler year for diesel,” GasBuddy Head of Petroleum Analysis Patrick De Haan told Transport Topics. The U.S. on-highway retail diesel price average started the year at $3.876 per gallon, according to the Energy Information Administration, a significant drop from the 2023 kickoff price of $4.583 per gallon. Last year, the national average saw a trough of $3.794 in July and a peak of $4.633 in September.
American Trucking Associations Chief Economist Bob Costello said there is unlikely to be a great deal of movement either up or down this year. He compared his expectations for the year to how diesel prices fared in December, when the national on-highway average lingered around and mostly sat below the $4-per-gallon mark.
Watching the Fed and OPEC oil ministers was a favorite sport of energy market observers in 2023, but analysts said the latter will have the tougher task in 2024 as its members balance ensuring sufficient revenue for their oil-dependent economies through output cuts and retaining market share at a time when U.S. crude production is churning along at record levels of nearly 13 million barrels per day.
U.S. average on-highway #diesel fuel price on January 8, 2024 was $3.828/gallon, DOWN 4.8¢/gallon from 1/01/24, DOWN 72.1¢/gallon from year ago #truckers #shippers #fuelprices https://t.co/lPvRNZG7iO pic.twitter.com/5CL8kdGLvz — EIA (@EIAgov) January 9, 2024
Business intelligence firm Wood Mackenzie expects benchmark Brent crude to average $88 per barrel in 2024, compared with $83 per barrel in 2023. West Texas Intermediate crude is expected to average $83 per barrel compared with $78 per barrel in 2023, Vice President of Refining, Chemicals & Oil Markets Alan Gelder told TT.
Bank of America Commodity & Derivatives Strategy Francisco Blanch expects Brent and WTI prices to average $90 per barrel and $86 per barrel, respectively, as the OPEC+ alliance is promising another 500,000 barrels per day of production cuts.
Brent’s low in 2023 was $71.84 a barrel in June and it peaked at $96.55 per barrel in late September, a price band that was half that of 2022, said Blanch. Brent’s high for the year matched the 2023 peak for U.S. retail diesel prices, with the underlying commodity bolstering wholesale diesel markets and consequently on-highway levels at truck stops around the nation.
“The supply cuts should be enough to remove any crude market surplus in the first quarter of 2024,” ING Head of Commodities Strategy Warren Patterson wrote in early December, and instead leave the market in a small deficit in early 2024. However, ING expects a small surplus in the second quarter of 2024, which means that the market is largely balanced over the first half of 2024, he added.
Want more news? Listen to today's daily briefing above or go here for more info
Global oil demand grew 2.1 million barrels per day year-over-year in 2023, boosted by lower energy prices and a sizable post-COVID-19 recovery in China, said BOA’s Blanch. In 2024, oil demand should grow by 1.1 million barrels per day as emerging markets benefit from the end of the U.S. monetary tightening cycle, while non-OPEC+ supply rises 1.2 million barrels per day, he said.
OPEC’s production cuts will be unwound as a result, as the alliance seeks to retain market share, said Wood Mackenzie’s Gelder. He added that with increased oil demand, diesel production is set to increase globally too.
