The weekly Department of Energy/Energy Information Administration retail diesel price rose by the smallest amount in the past eight weeks, but it still came in higher when a decline might have been possible.
Over the course of the eight-week streak, the DOE/EIA price is up 35.8 cents a gallon. The benchmark number is now also up 10 of the past 11 weeks, rising 40.6 cents a gallon during that time.
The drumbeat in oil markets rose Monday over the question of whether the U.S. would turn to additional releases of oil from the Strategic Petroleum Reserve to try to combat higher prices.
Various reports said the administration was waiting for the Tuesday release of the Short Term Energy Outlook from the Department of Energy before deciding its strategy. STEO is a monthly report that has a wide range of forecasts on prices. In last month’s STEO, which had a great deal of focus on home heating prices, the EIA said it expected the costs for all “major” home heating fuels will “increase significantly this winter.”
It said it expected heating oil to be up 43% compared to last winter, a significant number for diesel consumers since heating oil and diesel are both distillates, and environmental regulations that have affected both heating oil and diesel over many years have brought the specifications on the two of them closer in structure.
Although the benchmark retail price is higher, commodity markets in the past week have declined. Brent, the world crude benchmark, settled Monday at $83.43 a barrel, down from a settlement a week ago of $84.71. Ultra low sulfur diesel on the CME commodity exchange settled Monday at $2.4671 a gallon. A week ago, it settled at $2.5031, and it’s down a little more than 11 cents from the recent high settlement of $2.5773 on Oct. 26. Retail prices are slower to react, as the increase posted by DOE/EIA shows.
Another piece of market news on Monday: S&P Global Platts reported that the OPEC+ group of oil exporters increased its production by 480,000 barrels a day in October, significantly above the promise the group made to increase output by 400,000 barrels per day.
But Platts also noted that many of the members, which include OPEC countries and several non-OPEC nations led by Russia, struggled to produce their allotment last month. “Many of the group’s members have been beset by significant disruptions due to a combination of factors ranging from damaged infrastructure, operational issues and technical problems,” Platts said in releasing its monthly estimate on OPEC+ production.
With various countries such as NIgeria and Venezuela falling short of their targets, and the increases coming out of a shrinking number of countries, it raises the question of just how much spare capacity OPEC has.
“With many members pumping well below their quotas over the past several months, the alliance’s shrinking spare production capacity is becoming a talking point,” Platts said in reporting the numbers. It said that the Platts Analytics group “expects low OPEC+ spare capacity and the potential for a large supply disruption to be the overarching supply theme for 2022.”
More articles by John Kingston
Uber Freight’s Q3 revenues up almost 40% as Transplace merger looms
Truck transportation jobs take big upward move in latest monthly report
Cowen survey: Carriers saw almost 5% increase in rates during Q3