The benchmark diesel price used as the basis for most fuel surcharges rose this week by the second-largest amount since the start of the Iran war.
The Department of Energy/Energy Information Administration average retail diesel price climbed 33.8 cents/gallon to $5.134/g, published Tuesday but effective Monday.
The size of the increase is the second largest since the benchmark price rose 96.2 cts/g on March 9, the first time the DOE/EIA price measured a full week of market movement following the launch of military action against Iran by the U.S. and Israel on February 28/March 1.
With the benchmark price having moved up sharply two weeks in a row, it is now 55.6 cts/g more than where it stood just three weeks ago.
Retail prices, as they generally do, are reacting after the fact to increases in the price of ultra low sulfur diesel (ULSD) on the CME commodity exchange.
But they are likely only reflecting a part of the increases in that price just since the posting of the DOE/EIA price one week ago as the normal lag stays in place.
A $1 increase since July 2 is in sight
The pace of change in the futures market, if it continues, could end up adding $1/g in the price of ULSD on CME in the next few days.
ULSD's low settlement in the recent cycle was $3.1822/g on July 2, not even three weeks ago. In the 11 settlements since then, ULSD has risen in seven of those days. While that doesn't seem like much, the increases have been as high as just over 39 cts/g, 27 cts/g and 19 cts/g. By contrast, the biggest one-day decline was 8.59 cts/g.
The end result is that ULSD on CME settled Monday at $4.119/g, up 5.44 cts/g on the day and closing in a $1/gallon increase since that recent July 2 low. Monday's settlement was the highest since May 19.
ULSD was slightly higher in trade Tuesday, up less than 2 cts/g at approximately 10:45 a.m. EDT.
With prices having climbed over the last two weeks as military action resumed, the bullish voices in the market who were on their heels about a month ago are becoming more prominent.
Adding to the market sentiment Tuesday were reports about possible Houthi attacks once again on Saudi Arabia and the Bab el-Mandeb strait on the southern end of the Red Sea. Those attacks could impact Saudi exports of oil out of Yanbu, which is the western terminus of the country's east-west pipeline that has allowed the Kingdom to divert oil exports out of the Persian Gulf and the Strait of Hormuz and instead exit the country through the Yanbu port.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
