The average retail diesel price has continued its downward trend for the third straight week, falling by a total of 14.8 cents per gallon during this period. According to the latest data from the Department of Energy (DOE) and the Energy Information Administration (EIA), the current national average for diesel stands at $3.549 per gallon, reflecting a 3.3-cent decrease from the previous week. This marks the lowest recorded price since the final Monday of 2024, when diesel was priced at $3.503 per gallon.
Despite this decline, retail diesel prices appear to be trailing behind the steeper drop in futures prices for ultra-low sulfur diesel (ULSD) on the CME commodity exchange, suggesting that further price reductions may be possible in the coming weeks.
Diesel Futures and Market Influences
On the CME exchange, ULSD futures experienced a significant drop last Thursday, reaching $2.1622 per gallon. While prices saw a slight uptick on Friday, they surged by 3.72 cents per gallon on Monday, landing at $2.2038. This increase coincided with a broader rise in crude oil and fuel prices, largely driven by geopolitical tensions following a U.S. strike on Houthi positions in Yemen. Though Yemen itself is not a major oil producer, the attack heightened concerns about potential disruptions in the Middle East, particularly due to the Houthis’ ties to Iran.
However, these geopolitical events appear to be short-term factors. Over recent weeks, broader economic trends have exerted downward pressure on various asset classes, including equities, commodities, and cryptocurrencies, contributing to the sustained decline in diesel prices.
Supply and Demand Outlook
A recent report from the International Energy Agency (IEA) projects that global oil supply in 2025 will surpass demand by approximately 600,000 barrels per day. Additionally, if OPEC+ proceeds with its plan to ease production cuts starting in April, this supply surplus could expand by another 400,000 barrels per day.
On the demand side, the IEA noted a downturn in economic conditions, partly due to escalating trade tensions involving the United States. As a result, the agency has made slight downward revisions to its oil demand growth estimates for the final quarter of 2024 and the first quarter of 2025. Despite maintaining its forecast of 1 million barrels per day in demand growth for 2025, this figure remains only slightly above the 830,000 barrels per day increase seen in 2024—an unusually low growth rate for global oil demand.
Outside of OPEC+, most of the non-OPEC+ supply growth in 2025 is expected to come from the United States, Canada, Brazil, and Guyana, according to the IEA.
Conclusion
While short-term market fluctuations continue, the overall outlook suggests that diesel prices may remain on a downward trajectory due to supply surpluses and moderate demand growth. Industry stakeholders and consumers alike should monitor developments in the oil markets, including OPEC+ production decisions and geopolitical events, as they could influence price movements in the months ahead.
Source – https://www.freightwaves.com/news/benchmark-diesel-price-drops-for-a-third-straight-week