Diesel fuel prices looked reasonable a couple of weeks ago, for that matter so did gas prices. DOE diesel fuel prices were around $3.64 a gallon and looked like they would go lower still. What has changed not a lot really from 4 weeks ago when fleet fuel prices were lower. The best way to say it would be to say the little things have changed. Oil companies usually start to ramp up storage of diesel fuel in May. Since the diesel fuel prices in May were low they delayed doing so in case the market went lower.
The delay has lead to inventory declines now and contributing to the rise in diesel prices. Demand globally for diesel fuel has increased over the last few months too. Currently, U.S. stocks of ultra-low sulfur diesel fuel on July 27th were at 91.9 million barrels. Last year at this time they were 104.2 million barrels and two years ago 108.4 million barrels.
Throw into this monkey barrel of stuff, European issues, a good U.S. jobs report (but how good was it really), Iran testing missiles over this past weekend, hurricane worry and Brent crude out of the North Sea will see less production due to maintenance. These are some of the reasons how we are where we are with DOE National Price for Diesel Fuel this week at $3.850.
Good news, most analyst believe that the fundamentals don’t support oil prices going much higher. I am not really sure what that is worth these days. It was only a month or so ago that most though diesel fuel prices were going to go lower than $3.64.
A take away from this for everyone might be, you can’t control what goes on in the fuel trading market but you can control how well you purchase fuel, manage fuel and improve your overall fuel program.
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