June was a particularly volatile month for crude oil prices. However, the closing price for the month settled slightly below where the month started. The following graph displays the daily volatility:
The swing upward during the early days of June was essentially a continuation of the momentum from May mainly caused by concerns about supply disruptions. Toward the middle of June, oil prices fell as global financial markets weakened. In addition, the US’ worst mass-shooting in Orlando on June 12th may have added to the bearish sentiment.
As the 2nd half of June began, positive movements in global financial markets, along with reported declines in oil inventories, helped prices turn upward quickly. However, those increases abruptly reversed course and prices fell significantly after the surprising outcome of the “BREXIT” vote on June 23rd. Apparently, the shock wore off quickly as markets recovered within a few days and prices resumed their quest for higher ground.
Despite the volatility, the average price for the entire month managed to increase for the fourth straight period. As the average oil price continued to increase in June, wholesale and retail prices followed. The graph below shows the movement of crude oil (converted to gallons) along with wholesale (“rack”) and retail diesel fuel prices over the trailing 15 months:
As this graph shows, all prices increased in June with retail slightly advancing ahead of wholesale. Despite the increase, retail margins remain at a relatively low level compared to the preceding year as shown in the following graph:
Due to the market changes in June, most fleets would have seen a small increase in their fuel costs. Looking beyond June, volatility will likely continue and Sokolis anticipates prices will fluctuate near their current levels through the summer months followed by continued gradual increases during the remainder of the year.
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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