Diesel Price Rises 3.2¢ to $3.899 a Gallon
[Stay on top of transportation news: Get TTNews in your inbox.]
The national average diesel price bumped up 3.2¢ to $3.899 a gallon, according to Energy Information Administration data for the week of Feb. 5. It marked the first time in 2024 that trucking's main fuel has seen a price increase in consecutive weeks.
Diesel’s price increase was the second straight for a total of 6.1 cents a gallon. In the five reporting weeks in January, the average price decreased in three and rose in two.
A gallon of diesel now costs 64 cents less than it did at this time in 2023.
Diesel’s average price rose in eight of the 10 regions in EIA’s survey, with the biggest increase being 5.8 cents along the Gulf Coast. It dropped 2 cents in the Lower Atlantic and was unchanged on the East Coast.
In the meantime, the average price for a gallon of gasoline climbed 4.1 cents to $3.136 a gallon. That’s 30.8 cents less than it cost at this time a year ago.
U.S. On-Highway Diesel Fuel Prices
Diesel prices are expected to continue rising in the short term, especially with the U.S. economy ticking along nicely.
January’s additions were the largest in a year, according to American Trucking Associations Chief Economist Bob Costello. (On top of that, December’s increase was raised to 333,000 from the previously reported 216,000.)
The transportation and warehousing segment of the economy saw 15,500 positions added in January, data show. Drilling down on that figure, for-hire trucking employment — including truckload and less-than-truckload but excluding independent contractors — accounted for 2,400 of the 15,500 increase. A total of 7,500 for-hire jobs were added over the past three months.
As a result, EIA expects the average national diesel price to average $3.94 per gallon in the first quarter of 2024, it said Feb. 6 in the latest monthly Short-Term Energy Outlook. A month earlier, EIA expected the price to average $3.95 per gallon.
U.S. average on-highway #diesel fuel price on February 5, 2024 was $3.899/gallon, UP 3.2¢/gallon from 1/29/24, DOWN 64.0¢/gallon from year ago #truckers #shippers #fuelprices https://t.co/lPvRNZG7iO pic.twitter.com/k9mk6j2SuN — EIA (@EIAgov) February 6, 2024
U.S. average price for regular-grade #gasoline on February 5, 2024 was $3.136/gal, UP 4.1¢/gallon from 1/29/24, DOWN 30.8¢/gallon from year ago #gasprices https://t.co/jZphFa0hDF pic.twitter.com/yXMLjeCcfK — EIA (@EIAgov) February 6, 2024
February could see some of the strongest support, according to at least one analyst. GasBuddy Head of Petroleum Analysis Patrick De Haan’s 2024 diesel price outlook pegged February’s average price at $4.20 per gallon.
The second month of the calendar year typically sees a protection premium built into futures market prices as a safeguard against the worst of the winter weather at a time when refineries are carrying out maintenance, which in turn translates into higher retail prices.
Distillate inventories — a proxy for and mostly comprising diesel — fell 3.2 million barrels in the seven days ending Feb. 2, according to EIA data released Feb. 7. Analysts expected a decline of 2.5 million barrels.
Energy analysts at StoneX’s Kansas City, Mo., office indicated a decline in refinery use was behind the inventory decrease.
Tracy Shuchart, chief market strategist for Hilltower Resource, said separately on X that refinery maintenance season is in full swing; therefore, the storage numbers were unsurprising, given refineries were running at 82.4% of capacity in the most recent week.
Beyond the immediate time frame, observers also are becoming slightly more bullish about prices, given the underlying crude market strength and geo-political instability. EIA on Feb. 6 lifted its average national diesel price forecast for Q2 to $3.92 per gallon from $3.90 per gallon a month earlier.
EIA's Short-Term Energy Outlook noted benchmark Brent crude prices rose in January to an average of $80 per barrel and further upside was in the cards. EIA expects Brent prices in the mid-$80s in the coming months and said supply disruptions in the Middle East create the potential for crude prices to be higher than the agency’s forecast. Front-month Brent crude futures settled at $78.59 per barrel on Feb. 6.
EIA expects distillate fuel oil production to average 4.68 million barrels per day in Q1, compared with 4.69 million barrels per day in the year-ago period, and increase to 5 million barrels per day in Q2, it said Feb. 6.
That comes despite the agency reducing its U.S. crude refining capacity forecast by 120,000 barrels per day in March, earlier than previously expected.
In related news, Phillips 66 is to stop processing crude at its Rodeo facility near San Francisco. Phillips 66 plans to convert the facility to renewable fuels production before the end of the first quarter. The refinery produced around 60,000 barrels per day of distillates pre-conversion. Post-conversion, it will produce around 50,000 barrels per day of renewable diesel.
EIA expects U.S. renewable diesel production to average 230,000 barrels per day in 2024 and 290,000 barrels per day in 2025, both about 30% annual increases.
Want more news? Listen to today's daily briefing below or go here for more info: