The benchmark price of retail diesel is just about where it was a year ago, having recouped all of the lower numbers posted since the middle of July 2024.
The Department of Energy/Energy Information Administration’s average weekly retail diesel price rose 5.4 cents/gallon Monday, published Tuesday, to $3.812/b. It marked the seventh increase in the last eight weeks for the price that is the basis for most fuel surcharges.
Those increases have added 36.1 cts/g to the price published June 2, after which the 7 out of 8 increase sequence began.
The latest price is also the highest in just over a year. On July 15, 2024, the DOE/EIA price was $3.826. Every price since then has been less than the $3.812/g published Tuesday.
The increase in diesel prices can only be partly attributed to a rise in the price of crude. And crude has gone up: it settled June 2 at $64.63/barrel on the CME commodity exchange, and by the settlement Monday was up to $69.21/b. It has crossed the $70/b mark for a settlement a few times during that stretch.
But that increase is just 7%. Meanwhile, the price of ultra low sulfur diesel on the CME commodity exchange is up 22.7% during that time, settling Monday at $2.5092/g compared to a June 2 settlement of $2.0445/g.
During those two parallel yet different tracks, the front month ULSD price on CME has blown out to a diesel/Brent spread of more than 85 cts/g. On June 2, that spread was about 50 cts/g.
A chart released by the consulting firm Energy Aspects, in its monthly report on middle distillates–which includes diesel–tells a great deal of the story about why diesel is outpacing gains in crude.
The spread between ultra low sulfur #diesel and Brent on the CME commodity exchange is out to about 80 cts/g, the highest since February 2024. And this chart from @EnergyAspects explains a lot about why that is happening: inventories of diesel around the world are tight. pic.twitter.com/ftRNpbd1vt
— John Kingston (@JohnHKingston) July 21, 2025
While the data behind the chart was available only to subscribers, the chart clearly shows that global inventories of diesel are well below last year. But more importantly, they are also well below the five-year average for this time of year, and have been for several months.
An article published by Bloomberg Monday notes the specifics: that U.S. diesel stockpiles are “sitting at the lowest levels since 1996 for this time of year.” The EIA publishes its weekly data on all inventories each Wednesday.
Historically low
While U.S. inventories of ultra low sulfur diesel rose almost 5 million barrels in the week ended July 11 to 98.2 million barrels, they were still more than 4% below the smallest total for the second week in July in the last 10 years, and below most other weeks by a far greater amount.
The calendar may say July, but it’s close enough to cooler weather that the tight diesel market is beginning to talk about winter. Heating oil is a distillate, like diesel, and as winter looms and distillate molecules are increasingly turned into heating oil at the expense of diesel, there is a risk that the low inventories in the diesel market have already squandered a chance to recover.
Bloomberg quoted Samantha Hartke, Americas head of market analysis at Vortexa, as saying the diesel market “feels like a vicious cycle. “If stocks aren’t up in a few months, you’re setting up for a tight winter, which then rolls into next year with turnaround season in the spring of 2026.” Turnaround is the season, both in the fall and spring, when heavy refinery maintenance is undertaken and operating rates temporarily decline.
The Bloomberg article–and other commentary–noted a wide range of reasons for the growing tightness of diesel supplies.
New sanctions on Russia are being levied against that country, which is a major diesel exporter. Wildfires in Canada and Venezuela have affected exports from those two countries, whose slate of crude sold into the market is heavy and generally rich in a diesel yield when it is refined. Refiners are moving more of their distillate feedstocks into producing jet fuel, where market demand has been strong. But that comes at the expense of making diesel.
Refinery closures around the world also have a role. And while the closures impact gasoline as well, all major supply/demand models have been reporting for months that gasoline demand on the margin has been weakened by the gradual increase in the automobile fleet made up of electric vehicles.
That isn’t the case for diesel. But changes in refinery operations to compensate for that shift can’t be made overnight.
“This is a long-term shift based around refining capacity and product ratios,” Joe DeLaura, global energy strategist at Rabobank, was quoted as saying by Bloomberg. “A refinery cannot make diesel without first making gasoline, and it takes capital and time to retool that process.”
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