Diesel Resumes Decline, Sheds 3.9¢ to $4.077 a Gallon

Price Has Come Down 11 of the Past 12 Weeks
Getty image of a man pumping fuel
Diesel has come down 54.5¢ a gallon from its 2023 high on Jan. 30. (HAYKIRI/Getty Images)

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The national average price of diesel resumed its downward trend after a one-week pause, dropping 3.9 cents to reach $4.077 a gallon, according to Energy Information Administration data released April 24.

The national average price for a gallon of diesel has dropped in 11 of the past 12 weeks, from a 2023 high of $4.622 on Jan. 30.

A gallon of trucking’s main fuel costs $1.083 less than it did at this time in 2022.

The average price for a gallon decreased in seven of the 10 regions in EIA’s weekly survey, increased in two and was unchanged on the West Coast. The biggest gain was 2 cents in the Rocky Mountain region; the biggest decline was 5.3 cents in the Gulf Coast region.

The average cost for a gallon remained less than $5 in all regions for the third straight week.

Paschall Truck Lines CEO David Gibbs told Transport Topics April 24 that diesel’s softer tone had been a thin silver lining for truckers in what was an otherwise disappointing start to the year, noting that virtually every other cost line on the profit-and-loss ledger was higher and industry pricing much weaker than in 2022.

Companies are not buying a great deal of diesel at the moment, said Gibbs, as the market is in backwardation. A market is backwardated when the future price is cheaper than the current price.

“We are seeing what amounts to a ‘freight recession’ in the U.S. with soft demand for diesel on the roads, in the mines, and within agriculture,” Tom Kloza, global head of energy analysis at price reporting agency OPIS, said April 24.

“May is traditionally the lowest demand point for diesel across the planet so it will be very difficult for diesel to rally in the next five weeks. We’ll see quite a few refiners come back from maintenance and crank up runs at their complexes,” he added.

Kloza added that OPIS believes U.S. inventories of diesel will build between May and September and put more pressure on diesel markets.

How much diesel will be produced is a key question, sources say. Gibbs said gasoline stock levels are understood to be tightening, and how much gasoline will be produced will in turn impact how much diesel comes out of refinery gates. EIA data released April 19 showed U.S. gasoline stocks rose 1.3 million barrels in the week ending April 14, contrary to analyst expectations of an only slightly smaller decline. The week ending April 21 saw a decline in stocks of more than 2.4 million barrels, EIA data released April 26 showed.

Profits for diesel production are also weighing on expectations. Diesel delivered an epic performance for refiners in 2022 but so far in 2023 cracks for diesel have fallen steadily, Kloza told Transport Topics. That said, the margins for North American refiners are still much higher than the rest of the world, so conceivably, diesel prices could falter further even if crude remains stable and rallies, he added.

Crude prices have found support — even after pulling back following the spike above $120 a barrel caused by the March 2022 Russian invasion of Ukraine and subsequent sanctions on its oil exports — and the latest data shows drillers around the globe are continuing to chase barrels in ever greater numbers.

Baker Hughes said the U.S. rig count totaled 753 in the week that ended April 21, up five rigs compared with April 14, and was 58 rigs higher than a year earlier.

The data also showed drilling beyond the United States and Canada on the rise, with March’s international rig count totaling 930, up 15 compared with February and some 115 or 14% higher than in March 2022.

Increased refinery capacity and higher associated gasoline and diesel production should put downward pressure on fuel prices this summer compared with 2022, EIA said when releasing data April 19.

U.S. On-Highway Diesel Fuel Prices

EIA fuel table for April 24, 2023


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