Diesel Fuel Prices Going Higher

Diesel fuel prices will go higher. Look who is in your fuel management pocket.

Oil rose earlier to the highest in two years in New York as the dollar headed for a weekly decline against most major counterparts after the Federal Reserve’s decision to purchase more debt to boost the U.S. economy. Crude climbed for a fifth day, the longest rising streak in seven months. The Fed said Nov. 3 it will buy about $75 billion of Treasuries every month through June. The dollar traded near a nine-month low versus the euro, increasing the investment appeal of commodities. U.S. crude stockpiles rose last week to the highest level since May 2009, according to an Energy Department report on Nov. 3. “You’ve got to question the ability of crude to stay at this level” because of high inventories, said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “But the problem is you don’t want to bet against it. You’ve got $75 billion hitting the market every month.” Simply put your downstream cost on diesel fuel prices, mobile fueling, truck stop and fleet fueling will soon be going up.

Chinese processing

China National Petroleum Corp., the country’s largest oil and gas producer, plans to continue processing crude at record levels reached on Nov. 3 for the rest of the month to help meet increased year-end demand. The parent of Hong Kong-listed PetroChina Co. will refine about 400,000 metric tons of crude a day, or about 2.9 million barrels daily, CNPC said in a statement on its website today. The company will raise processing volumes by 8.5 percent this month from a year earlier and boost output of fuel including diesel and gasoline by 11 percent, according to CNPC. China is battling a diesel shortage in some regions because of increased use by factories and seasonal demand from farmers busy with the autumn harvest. CNPC said it will expedite operations at new refineries and resume production on time at plants where maintenance is scheduled for the fourth quarter. Yes, watch China grow. Remember 2008 when diesel fuel prices hit $5.00 in some areas. Even the best of your fuel cards could not stop that. When you have 1.5 billion people a lot of things can happen. You can only control what you have in front of you and hopefully that is a good fleet management tool that is capable of helping you with your fuel management systems so that you can try and achieve some kind of fuel savings in a crazy fueling market.

OPEC

The Organization of Petroleum Exporting Countries raised estimates for global oil demand through to 2014 on growth in Asia, and forecast that alternative supplies will restrain the world’s need for its crude.

OPEC, responsible for 40 percent of worldwide crude production, expects oil consumption to increase 5.1 percent to 89.9 million barrels a day by 2014 from this year. That’s 800,000 barrels a day more than it predicted last year. OPEC cut the demand forecast for its own crude by 900,000 barrels a day on rising use of natural gas liquids and non-conventional oils such as biofuels. “A swifter-than-expected recovery from the global recession has led to positive impacts upon oil demand,” the group’s Vienna-based secretariat said in its annual World Oil Outlook report today. “The expanding role that non-crude forms of liquid supply will play in satisfying demand is an important feature.” Producers outside OPEC will increase output of crude, natural gas liquids, and non-conventional oils by 2.2 million barrels a day to 53.3 million a day by 2014, limiting the need for extra supplies from OPEC. The growth is driven by Canadian oil sands projects and Brazilian biofuels.

Spare Capacity

The organization cut its 2014 forecast for consumption of its own crude to 30.6 million barrels a day. That means it will still need to increase crude production by 1.3 million barrels a day in four years’ time from 29.3 million a day this year. OPEC’s current spare production capacity would allow it to provide nearly four times that amount. Idle capacity was at 5.8 million barrels a day last month, down from a seven-year high of 6.8 million in March 2009, according to a Bloomberg News survey. China’s demand for crude will increase 21 percent to 10.5 million barrels a day in 2014, and then to 10.9 million a day in 2015, from 8.7 million a day this year, according to the report. Global consumption will reach 91 million barrels a day in 2015, it said.