The national average price for a gallon of diesel fell 1.7 cents to $2.413 for the week ending January 28. This could be the last week of declines in what is now the eighth consecutive week of rollbacks, warned the Energy Information Administration (EIA).
The price of crude oil is creeping back up to the $56/barrel level, according to EIA senior oil market analyst Doug MacIntyre. Consumers have recently enjoyed a windfall drop in fuel prices as unusually warm winter weather in the U.S. drove energy demand down and inventories up.
“Crude oil prices have started going back up again and there’s usually a couple of weeks lag between what happens to crude oil prices and retail,” MacIntyre told FleetOwner, adding that the recent “lag” consumers were enjoying has just about come to an end.
“This is probably the last week of falling diesel prices,” MacIntyre said. “But we’re not anticipating much of an increase— about a penny or two per week for the next two to three weeks.”
After that New England weather may have a significant impact on diesel. The mid-Atlantic Northeast region drives roughly 75% of the nation’s heating oil demand, MacIntyre explained. The late start of winter temperatures in the region allowed the nation’s inventory of both crude oil and distillate, a petroleum product from which diesel and heating oil is derives, to rise above average.
“Heating oil is similar to diesel fuel,” MacIntyre said. “If things get tight in the heating oil market, diesel fuel is the closest substitution, which would increase the price of diesel.”
OPEC has scheduled further cuts to its crude oil output effective February 1 to shore up prices. Today Saudi Arabia, an OPEC member, confirmed it intends to make good on its commitment to slow the flow of oil exports.
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