Diesel Benchmark Rises Slightly Again as Market Stability Persists
A fourth consecutive week of minor changes in the benchmark diesel price, crucial for calculating most fuel surcharges, highlights a market possibly characterized by either steady progression or stagnation.
The Department of Energy/Energy Information Administration reported a modest increase of 0.2 cents per gallon, bringing the average weekly retail diesel price to $3.697. Over the past three weeks, increments of 0.1 cents, 0.5 cents, and 1.2 cents culminated in an overall rise of 3.8 cents per gallon.
Significantly, the current price is notably higher compared to pre-Christmas levels, where the benchmark on Dec. 23 was $3.476 per gallon. This marks a 22.1-cent per gallon increase since then. Most of this rise occurred in early January, following new sanctions announced by the outgoing Biden administration against Russian oil shipping, pushing the ultra-low sulfur diesel (ULSD) settlement price on the CME commodity exchange to $2.621 per gallon on Jan. 17.
Though prices have gradually decreased to a recent settlement of $2.4358, retail prices haven’t mirrored this downtrend as substantially. When paralleled with initial volatility post-Russian invasion of Ukraine three years ago, current market steadiness is glaring.
Bloomberg's recent article highlights “Trump's Policy Deluge” causing stasis within the oil market, quoting Standard Chartered Bank's findings on market disorientation due to rapid policy shifts. Many traders, overwhelmed by these factors and unpredictable market triggers, have minimized risk exposure.
This Thursday, the diesel market might have shown signs of breaking away from the status quo, albeit temporarily, as ULSD prices rose 4.69 cents per gallon to $2.5034. However, subsequent dips, including a 7.11-cent decrease the next day, returned the price near its previous state.
Monday's slight gain cemented ULSD within the $2.43-$2.46.5 per gallon bracket, a range maintained for nine out of the last eleven settlements. Such minute fluctuations elicit efforts to pinpoint daily price movement catalysts. Accompanying ULSD's small increase was Brent crude’s 35-cent rise, elevating to $74.78 per barrel.
While news outlets speculated recent sanctions on Iranian shipping as a possible catalyst, the absence of major market imbalances and Bloomberg's highlighted trading inertia suggest little justification for substantive price shifts—until an unforeseen event occurs.
For more insights and industry updates, explore our Shop, Register, and explore our Help Center.
This article originally appeared on FirstELD.