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After another decline, benchmark diesel price again below $5 per gallon

The benchmark diesel price used as the basis for most fuel surcharges is back below $5 per gallon. 

According to the Energy Information Administration of the Department of Energy, the average retail diesel price in the U.S. last week was $4.964 per gallon, a decline of 6.9 cents from the prior week. It marked the 13th decline in the past 14 weeks. 

The benchmark’s first move to less than $5 occurred during three consecutive weeks in August. But then a huge upward move of more than 20 cents on Aug. 29 took the price back above $5. Three weeks later, it’s below that mark again.

With the latest decline, the DOE/EIA diesel price is down 84.6 cents since its all-time high of $5.81 a gallon recorded June 20.

Retail prices’ upward and downward moves are far smoother and steadier than the jolts that can be recorded in the diesel futures market on the CME commodity exchange. That has never been more evident than during just the past few days.

After price movement during the week of Labor Day showed some of the least volatility it has recorded in recent months, price movement swung into high gear last week, all of it on the way down.

Four days of significant declines in the price of ultra low sulfur diesel (ULSD) on CME last week shed 43.06 cents a gallon off the Sept. 12 settlement of $3.6031 a gallon, with the market falling to $3.1725 per gallon by Friday. There were several statistical points in the market last week, as well as news developments, that appeared to lead to a sell-off, including a significant increase in U.S. diesel inventories reported in the weekly EIA statistical report.

But Monday, that trend suddenly reversed on the back of little news. Even as the EIA was recording another drop in the weekly benchmark diesel price, ULSD on CME  climbed 13.38 cents a gallon Monday, to settle at $3.3108 a gallon. That’s still almost 30 cents less than where it settled just a week ago.

The increase in diesel was more than 4.3%, even as crude benchmarks West Texas Intermediate and Brent were both up just about 0.7%. RBOB gasoline gained more than 4.8%.

One significant piece of bullish news actually emerged Friday: reports that the Netherlands was going to buy diesel for its winter stockpile. The Dutch agency that holds petroleum stocks, COVA, issued a tender Friday. But that did not appear to impact the market on that day.

Most other news Monday was more bearish. For example, there were multiple reports that water levels on the Rhine River through Germany, a key waterway for delivering diesel and other fuels into that country and Switzerland, had benefited from lower temperatures and more rain, reversing a slide in levels that had led to a cutback in the amount of shipping on the river. Levels were described in various reports as “normal.”

A return to more normal transit on the Rhine would lessen the need to move commodities and other freight on trucks, which is more diesel-intensive than moving it via barge on the river.

The U.S. government announced plans for a further sale of crude from the Strategic Petroleum Reserve in November. There had been some expectations that sales would stop after October, as demand for SPR crude was not matching the supply made available. But the Department of Energy announced late Monday that it would make available for sale 10 million barrels of crude in November.

One notable aspect of this week’s DOE price: California’s diesel prices are falling far less than those of the U.S. as a whole. And while the EIA price for California, $6.149 a gallon, was down 1.1 cents on the week, its spread with the national price, $1.185 a gallon, is now the highest in the history of the agency’s reports going back to July 1995, when it launched California prices to complement its other reporting.

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