DOE / EIA price up 1.9 cents, retail diesel begins to lag significantly behind wholesale prices

The Department of Energy / Energy Information Administration’s weekly average diesel retail price rose Monday to $ 3.274 per gallon, an increase of 1.9 cents per gallon.

Given recent increases in commodity and wholesale prices that did not translate into relatively minor upward movements in retail prices, this increase could be considered smaller than expected.

Although retail prices do not automatically reflect wholesale prices, the small retail increase contrasts with the movement in the national average wholesale price of diesel based on the ULSDR.USA data series in SONAR. That number rose 7.6 cents per gallon between May 28 and Monday, to $ 2.282 per gallon from $ 2.216 on the Friday just before Memorial Day weekend. The wholesale price according to ULSDR.USA is also up 13.3 cents from May 21.

Yet DOE increases over the past three weeks, a timeline that largely matches these ULSDR price increases, now total just 2.5 cents per gallon.

As a result, the FUELS.USA data series in SONAR, which measures the gap between wholesale and retail diesel prices, stood at just over 92 cents per gallon on Monday, the lowest in the entire period. year.

To learn more about FreightWaves SONAR, visit here.

The moderate rise in diesel prices also contrasts with what is happening in the commodity markets. Even with prices falling slightly on Monday, the price of ultra-low sulfur diesel on the CME commodities exchange has risen just over 7 cents per gallon since May 28.

But a feature of the market in recent weeks has been that the spread between CME diesel and the price of Brent, the international benchmark for crude, has traded in a narrow range, mostly 40 to 42 cents per gallon.

Diesel neither outperforms nor underperforms crude. That hasn’t been the case for much of 2021, when the diesel-to-crude differential has steadily and steadily increased from early-year levels nearing 25 cents per gallon. It appears to have reached a balance now close to the 40-42 cent-per-gallon level, where it opened in 2020 before the impact of the pandemic brought it down due to excess diesel production relative to demand. .

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