The first weekly movement in the weekly Department of Energy/Energy Information Administration retail diesel price in 2022 was in the same direction as the final six weeks of 2021: downward.
The move in the benchmark price, however, was the smallest of any of the seven consecutive declines, at.02 cents per gallon. And, given recent market trends, it’s possible that it’s the last in this current run of lower prices.
The latest EIA price of $3.613 per gallon reported Monday is the lowest since Oct. 18, when it was $3.671. It also represents an increase of 97.3 cents per gallon for the entire year 2021, as the first number reported by the EIA last year was $2.64 per gallon.
The seven-week slide is the longest series of declines since the pandemic’s epic 19-week slide at the start.
Even as the benchmark number for the trucking industry fell once more, broader market trends appear to be pointing upward.
The CME commodity exchange’s ultra-low sulfur diesel (ULSD) price settled Monday at $2.3574 per gallon, barely changing from a week earlier. However, prices rose for four days in a row that week before a big drop on Friday — New Year’s Eve — wiped out much of that gain. However, the CME ULSD settlement increased 1.17 percent from Friday to 2.73 cents higher on Monday.
This week’s OPEC+ meetings are being closely watched by the oil markets. It plans to add 400,000 barrels per day of new crude supply to the market, as it has done since last spring as it unwinds the cuts it made when the pandemic first hit oil demand.
However, reports in the run-up to the meeting were clearly upbeat. While the 400,000-barrel-per-day increase is expected — it was doubtful a month ago, when news of omicron was still fresh — it may not be enough to significantly replenish depleted global inventories, given changes in supply and demand.
For months, market bears have pointed to supply/demand forecasts for the first half of this year, which showed oil markets in significant surplus. However, according to reports, OPEC’s research team reduced its forecast for market oversupply to 1.4 million barrels per day in the first quarter, a significant decrease from estimates just a month ago.
Part of the reason for the drop is OPEC’s prediction that the omicron variant will have a minor impact on demand. According to S&P Global Platts, one OPEC delegate stated of the OPEC forecast: “No major evidence on omicron impact on demand.” “Things are looking up so far.”
