After an up-and-down week in commodity and wholesale markets, the weekly Department of Energy/Energy Information Administration price for diesel rose by less than a half-cent.
The price published by the EIA Monday was $3.253 a gallon, a gain of 0.4 cents. It marks the fourth consecutive week of a price increase, which followed a one-week status quo number. The end result: There has not been a downturn in the DOE/EIA price in five weeks.
Commodity diesel prices had a volatile stretch last week, with two days of declines in excess of 4 cents a gallon on the CME commodity exchange, and an increase Monday of 5.38 cents a gallon. The end result was a market that ultimately did decline over the last six days of trading, with the May 17 settlement of $2.0604 a gallon in the ultra low sulfur diesel contract sliding to $2.042 on Monday.
But in the all-important measurement of the price of worldwide crude benchmark Brent against ULSD, the value of diesel to Brent softened slightly over the course of the week. However, when it reached its peak last week, it meant that the value of that spread had now recovered to levels it has not seen since the first few weeks of the pandemic. That suggests its steady gains relative to crude may have run their course.
S&P Global Platts said it expects global oil demand will rise 8.2 million barrels a day between this month and August. That is a significant increase off a first quarter base of about 93.7 million barrels a day, according to International Energy Agency estimates.
In this chart, S&P Global Platts also said it expects worldwide demand for diesel will reach pre-pandemic levels by the end of the year.
Source: S&P Global Platts
“With mobility rapidly recovering in the US and Europe as lockdown restrictions ease and a seasonal upswing expected in transportation and industry activity, the world should see a major oil demand surge over the summer, oil market analysts believe,” S&P Global Platts said in a report about its analysts’ findings.
U.S. refinery input has been above 15 million barrels a day for the five of the past six weeks, the first time that has happened since the start of the pandemic. The most recent figure reported by the EIA, 15.116 million barrels a day, was the second biggest in that stretch. “With global commodities rising to record highs, Chinese government officials are trying to temper prices and reduce some of the speculative froth that’s driven markets,” Bloomberg wrote in a story published early Monday morning China time. “Wary of inflating asset bubbles, the People’s Bank of China has also been restricting the flow of money to the economy since last year, albeit gradually to avoid derailing growth.”