The Department of Energy/Energy Information Administration weekly average retail diesel price rose Tuesday for the 10th consecutive week, on the same day that commodity oil prices plummeted.
Arriving a day later than usual because of the July Fourth holiday, the DOE/EIA price came in at $3.331 a gallon, an increase of 3.1 cents from the prior week.
Not only did the price mark the 10th consecutive week of increases, it was the 11th consecutive week of no decreases. The price was unchanged in the week of April 26, when it held at $3.124 per gallon. Since then, it has added 20.7 cents per gallon.
Prior to the large decline in the price of ultra low sulfur diesel on the CME Tuesday, retail prices had been lagging movements in the price of wholesale diesel. The FUELS.USA data series in SONAR has been stuck below $1 a gallon since mid-June, whereas historically that spread tends to be in the $1 to $1.05 range.
Even with that weak spread, the increase in the wholesale price of diesel in the past week has been enough to help retail diesel move up. The national average wholesale diesel price as found in the ULSDR.USA data series in SONAR moved up 5.5 cents between June 29 and Tuesday.
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But the market is now dealing with the sharp downturn posted in commodity markets Tuesday on the back of OPEC and its fellow oil exporters in the OPEC+ group’s failure to approve putting more oil on the market, despite a growing imbalance between supply and demand. Oil prices moved higher in the initial reaction to the meeting’s outcome but plummeted later.
When OPEC doesn’t do what had been expected, markets tend to fall. The first reaction of higher prices went against the norm. But it caught up later in the day.
By the time prices had settled for the day, the price of ULSD on CME was down 7.42 cents a gallon, settling at $2.1049 per gallon. It was the lowest settlement since June 16. It was also the biggest one-day decline in the ULSD price since a 7.55-cent decline on April 14.
The 3.41% decline far exceeded the declines in crude, where WTI dropped 2.38% and Brent declined 2.82% on the day.
Oil prices were also sent lower by a 0.35% increase in the value of the dollar as measured by the DXY index. That is a large move for one day. Oil prices tend to move inversely to trends in the greenback.