Diesel Fuel Prices and Gas Prices Jumped in February But Pricing To…

February retail diesel fuel prices and gas prices jumped 10.6% and 5.2%, averaging $4.111 per gallon and $3.670 per gallon, respectively. Much of this price jump can be attributed to major refinery maintenance and the switch over to more expensive summer blends. Since then, WTI and Brent have dropped to $90.33 per barrel and $110.76 per barrel, respectively. Regular gas prices declined 2.5 cents from a week earlier to $3.759 per gallon, the first drop in EIA gasoline prices in 11 weeks.

Fleet fueling prices may be high now but the market is expecting diesel fuel prices and gas prices to be much cheaper in the second half of 2013 and even cheaper in 2014.

Key market factors that may place upward pressure on prices:

• Signs of continued U.S. economic improvement with U.S. retail and food services showing an increase of 4.4% in January 2013 vs. January 2012.
• Threat of continued geopolitical tension in the Middle East is not well priced into the market.
• Future weakness in the U.S. dollar against the Euro would drive up diesel fuel prices and gas prices
• A leak was discovered in the Brent oil pipeline system shutting down production from 27 North Sea oil fields, forcing customers to source oil from other terminals.
• The U.S. heating oil stock is 12.2% lower than last year and 17.8% lower than the three year average.

Key market factors that may place downward pressure on prices:

• The sequester budgetary cuts could slow U.S. economic growth with $85 billion in government cuts spread out over one year.
• Global economic recovery concerns with the European Commission reporting that the euro-zone economy could shrink for the second year in a row.
• The market remains worried about China’s lower growth prospects. Specifically, China’s February nonmanufacturing Purchasing Managers’ Index came in weaker than expected and the Chinese government announced measures to cool the real estate market.
• A recent weekly EIA report showed that crude stockpiles in the U.S. climbed 0.3% to 377.5 million barrels which is now 22.0% higher than last year and 25.8% higher than the three year average.

In summary, the belief is that there is more good than evil out there and diesel fuel prices and gas prices should drop putting less stress on your fleet management. However, a word for the wise you don’t want to count on anything because a blown fuel management budget and your company could sink.

For more information on fleet fuel management call 267-482-6159