Crude oil prices ended 2017 at just over $60/barrel; a level not seen since June 2015. December’s prices were relatively flat during the first half of the month followed by a gain of approximately 4% to end the month. Prices have now increased almost 28% from the start of September. The following graph shows the daily price movements over the past three months:
The rise in crude oil prices during the last half of December was based on continued optimism that the extension of production cuts by OPEC and other countries was making an impact toward rebalancing supply and demand. The agreement to extend the cuts was formally approved at OPEC’s meeting on November 30.
Although oil prices increased during December, retail prices for diesel were flat while wholesale prices declined slightly. Retail and wholesale prices for gas both decreased modestly as demand continued to decline. The graphs below show the movement of crude oil (converted to gallons) along with wholesale and retail fuel prices over the trailing 15 months:
As wholesale prices for diesel declined while retail prices held steady, diesel retail margins grew slightly above their 5-month slump. Gas margins also moved slightly higher. The following graph shows retail margins for diesel and gas over the trailing 15 months:
Wholesale and retail prices have remained at their highest levels over the past two and a half years. Looking toward the first quarter of 2018, Sokolis anticipates crude oil prices will continue to hover around $60/barrel. In addition, prices have the potential to increase further if demand remains strong, inventory levels continue to decline, and OPEC’s deal compliance holds firm.
If you’re concerned about the impact of future fuel price changes for your fleet and want to know if you’re receiving the best fuel prices possible, contact Conor Proud at Sokolis, cproud@sokolisgroup.com or 267-482-6159. We are the nation’s leading independent fuel management consulting team and can help you make sure that your fuel management program is running at peak efficiency.
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