The national average price for a gallon of diesel jumped 10.1 cents to $4.545 a gallon after a recent downswing, according to Energy Information Administration data released Oct. 23.
A gallon of diesel on average had shed 18.9 cents over three of the previous four weeks.
The steep shift to the upside in the most recent week is the largest since a 9.3-cent rise in the week up to Sept. 18 and the first double-digit rise since a 13.9-cent surge Aug. 14.
The average national price for trucking’s main fuel rose in five of the 10 regions in EIA’s weekly survey.
Gasoline, meanwhile, slipped to $3.533 per gallon on average. That is down 4.3 cents from the previous week and 23.6 cents from a year ago.
Diesel’s gains ranged from 25 cents in the Midwest to four-tenths of a penny on the East Coast. The declines ranged from four-tenths of a cent in the Central Atlantic to 10.3 cents in California.
Skewing the national average, Midwest prices jumped on the back of refinery outages along the Magellan Pipeline system, according to analysts.
Magellan’s 9,800-mile-long pipeline system carries refined products including diesel from the Texas Gulf Coast north as far as North Dakota and Minnesota, connecting 15 Midwestern states.
By Oct. 23, however, upstream supply issues were normalizing, the analysts said. As a result, prices for wholesale diesel plummeted, and a domino effect is expected for terminal/rack prices and then truck stop wallets in the coming days.
However, some underlying demand-side support for Midwest prices remains, so the downside is expected to be limited, Patrick De Haan, GasBuddy’s head of petroleum analysis, told Transport Topics on Oct. 23. Demand remains strong in the Corn Belt, De Haan said.
Support for retail diesel prices more widely also came from geopolitical factors boosting the global energy complex, with front-month benchmark WTI crude futures prices nearing $90 per barrel after beginning the Oct. 16-20 week below $85 a barrel.
However, further support from the wider energy complex in the coming days is expected to be muted, with front-month West Texas Intermediate falling below $84 per barrel Oct. 24 and wholesale diesel futures relatively range-bound.
Late October and into early November tend to see seasonal highs for diesel prices as demand-side support wanes, said David Thompson, executive vice president at Washington-based brokerage Powerhouse.
At this time of year, the Midwest harvest season is coming to an end, consumption in the construction sector is ramping down and preparations for fuel oil demand in the coming winter are at an end, Thompson told TT in a phone interview.
There also is more supply entering the market as maintenance outages at refineries ramp down, he said.
One exception to the softer tone in the wholesale and retail diesel market could be New England, said De Haan, citing supply tightness.
“We could see more hot spots because of supply tightness,” he said. “The next few weeks could be a challenge.”
Irving Oil’s 320,000 barrels-per-day Saint John refinery in New Brunswick shut in mid-September for several weeks, as did the 185,000- barrels-per-day Trainer refinery near Philadelphia owned by Delta Airlines unit Monroe Energy.
When those facilities return will play a significant role in the direction of regional prices, analysts said. “Saint John’s return will put more of a ceiling [on the regional market] if there is a rally, but I’m still worried about inventories,” De Haan said.
Refinery outages will be a key variable in diesel markets in the coming months, analysts have told TT in recent weeks, citing global diesel supply tightness as well as low U.S. inventories, with stocks 12% below the five-year average in the week that ended Oct. 13.
As a result, the fear is that there may be a bolt to the upside. Oil Price Information Service founder and energy analyst Tom Kloza told TT on Oct. 17: “I believe that diesel is like a coiled spring ahead of the real winter months of December, January and February.”
EIA itself expects retail diesel prices to average $4.57 a gallon in the fourth quarter of the year, the agency said Oct. 11.
Retail diesel prices are then predicted to average $4.42 a gallon in the first three months of 2024, a 1.5% increase compared with the federal agency’s expectations a month earlier.
