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Yahoo
19 hours ago
- Business
- Yahoo
Oil prices are higher out of the gate after Iran attack, but increase isn't gigantic
Oil markets opened higher Sunday evening U.S. time following the military strike on Iran by the Trump administration, but the size of the increase was considered somewhat underwhelming compared to the more apocalyptic predictions heard prior to the attack. However, from the perspective of the trucking industry, it was the continued strength of diesel compared to crude and gasoline that might get the greatest amount of attention. At approximately 7:05 p.m. EDT, about an hour after trading began on various exchanges, global crude benchmark Brent was up $1.88/barrel to $78.89/b, a gain of 2.44%. The U.S benchmark crude grade, West Texas Intermediate, was up 2.52% to $75.70/b, a gain of $1.86/b. RBOB gasoline, which is a semi-finished gasoline product that serves as the trading platform for finished gasoline, was up 2.19% to $2.3806/gallon, an increase of 5.11 cts/g. (RBOB is essentially gasoline without the added ethanol). But it was ultra low sulfur diesel (ULSD) that showed the largest increase Sunday evening. It rose 3.67% to $2.6352/g, an increase of 9.34 cts/g. If ULSD settled at that level Monday afternoon in the U.S., it would be the highest price since a settlement of $2.6513/g on April 16, 2024. The most bullish scenario for the oil market in the weeks leading up to the attack by the U.S. on Iranian nuclear facilities and now in the wake of an actual one is the fate of the Strait of Hormuz, which is the gateway to the Persian Gulf and the route of oil exports from numerous countries, including Saudi Arabia, Kuwait, Iraq and Iran. A Reuters report from 2023, quoting various sources, said about 20% of the world's roughly 103 million b/d of consumption passes through the Strait of Hormuz every day. There are alternative export routes via pipeline for some of the countries, but it is unclear how much the infrastructure ramping up to 100% of capacity can replace normal export levels through the Strait. The Strait of Hormuz is not international waters. Part of it is Iranian territorial waters; the other portion is the territorial waters of Oman. The Iranian Parliament voted over the weekend to close the Strait of Hormuz, though several news reports noted that the decision whether to implement such a radical step would be up to the country's senior leadership. Secretary of State Marco Rubio, in an interview with Fox News Sunday, called upon China to dissuade Iran from pursuing that policy. China is easily the largest customer for Iranian crude, and the supply line for it comes out of Iran via the Strait and on to China. 'I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil,' Rubio said, according to several reports of his interview. It was noted by other analysts that closing the Strait of Hormuz would have an outsized impact on Iranian exports, cutting off its most important revenue source. Meanwhile, the soaring spread between crude and diesel is a relatively new phenomenon. On a straight comparison of front month ULSD to front month Brent, that spread Sunday evening, using the 7:05 pm prices, translated to about 75 cts/gallon. It is the widest spread since February 2024. A month ago it was about 56 cts/g. In its monthly report on the market for middle distillates including diesel, published just before the actual attack, the oil market analytics research firm of Energy Aspects spelled out some of the reasons for the continuing strength of diesel relative to crude. 'We see increasing risks to middle distillates supply due to the escalation of the Israel–Iran conflict after last Friday's attacks,' EA said. As far as the two Middle East combatants, the EA report said all Israeli refiners are 'non-operational' after attacks by Iran. The country has a relatively small refining capacity, but it is a net exporter of diesel, EA said. That means it presumably will need to turn to imports to replace the lost capacity. As far as Iran, EA said, it produces about 700,000 b/d of diesel. It also is a net exporter of diesel, 'but could need to import in case of any supply disruptions,' it said. EA's report also contained a chart showing a relatively tight level of diesel inventories in Europe. U.S. inventories also have been well below the five and 10-year average for the second week in June, but with diesel demand down as well, the amount of 'days cover'–the size of the stocks measured as how long on their own they could cover consumption–has been climbing in recent weeks. More articles by John Kingston DAT and OTR, embroiled in dispute over factoring, reach settlement and end battle Onstage in Chicago, CHRW talks tech and staffing; RXO sees language order hitting capacity Logistics GDP share rose in '24, not likely to drop: CSCMP report The post Oil prices are higher out of the gate after Iran attack, but increase isn't gigantic appeared first on FreightWaves.
Yahoo
6 days ago
- Business
- Yahoo
Benchmark diesel price makes its biggest upward move since January
The weekly benchmark diesel price used as the basis for most fuel surcharges made its largest upward move since January and the third-largest increase since the start of 2024. The price published by the Department of Energy/Energy Information Administration effective Monday rose 10 cents/gallon to $3.571/g. It's the biggest increase since January 20. There was only one larger upward move in 2024. Retail prices lag movement in futures prices (though wholesale prices react quickly to changes in the futures market). Given that, attributing the higher benchmark to the increases in futures prices spurred by the Iran-Israel war might not be oil and diesel prices started to move higher on the back of Israel-Iran military action, there had been a strong upward push in the price of ultra low sulfur diesel (ULSD) on the CME commodity exchange that appears to be the primary cause of this week's big increase in the benchmark. From a settlement of $2.0445/g on June 2, ULSD climbed as high as a settlement of $2.2053/g on Wednesday. It dipped slightly Thursday, but roared ahead by 17 cts/g on Friday, after the military action between Iran and Israel commenced. ULSD Monday rose 3.46 cts/g, coming on a day when crude prices fell due to a perception in the market that the war's impact on oil supplies might be limited. Diesel's upward move Monday in contrast to the decline in crude could reflect the fact that if any Iranian supplies are impacted by the war, its crude is a heavier grade that would yield more diesel than gasoline. The front-month spread between ULSD and Brent Monday was just under 65 cts/g, the highest it had been since no signs of the conflict easing Tuesday, ULSD at approximately 10 a.m. was up 7.56 cts/g to $2.4689, a gain of 3.15%. If it settled there, it would be the highest ULSD settlement since February 20. The American Automobile Association's daily estimate of the national average diesel price Tuesday, released in the morning, was not far off from the DOE/EIA price. That price posted Tuesday by AAA was $3.567/g. That was up more than four cents from Monday's level of $3.524/g and up slightly more than 6 cts/g from a week ago. Going right to the source, a review of the downloadable pump prices at Pilot Flying J shows a clear upward trend, but not across the board. The increases could also reflect local conditions not tied to the broader diesel market. But some of the increases in effect Monday compared to Friday were significant. A 41-cent increase between Monday and Friday was recorded at Grand Prairie, Texas; prices were up 25.1 cents in White Hills, Arizona. But at the same time, a comparison of prices downloaded Tuesday compared to Friday show some stations not changing their prices during that time, though increases of 10 cts/g and 20 cts/g are heavily represented in the data. Helima Croft, the managing director and global head of commodity strategy at RBC Capital Markets, said on CNBC Monday that the decline in crude prices that day reflects that 'markets decided that the Strait of Hormuz and other critical export infrastructure is not at risk.' She did note that there have been energy infrastructure targets hit in both countries, including Israel's Haifa refinery. At a capacity of 197,000 b/d, Haifa is Israel's largest refinery but a capacity at that level is not particularly big by international standards. But a Reuters report Tuesday was more dire, saying that Iranian oil exports have been severely affected by the ongoing military action. 'Iran's oil exports appear to have essentially ground to a halt in recent days,' the Reuters report said. 'Total Iranian crude and condensate oil exports this week are currently forecast to reach 102,000 bpd, compared with a weekly average of 1.7 million so far this year, according to analytics firm Kpler.'The report also said exports from Kharg Island, which normally handle about 90% of Iran's oil exports, 'appear to have completely halted since Friday.' It cited tanker tracking data as the source for that conclusion. Even as oil prices were climbing anew on Tuesday, the monthly report of the International Energy Agency once again reduced its estimate on global oil growth in 2025. The IEA's estimate, released Tuesday, now is that global oil demand will rise by 720,000 b/d in 2025. A month ago, that estimate was 740,000 b/d. Outside of the pandemic, global oil demand growth for years has been checking in at more than 1 million b/d, and sometimes hitting 2 million b/d. The IEA also isn't suggesting that 2025 is an outlier. It held its estimate for 2026 growth at 740,000 b/d. The IEA does not forecast total future supply, given that OPEC would be expected to adjust its output depending on market conditions. But it did say that May global supply was 104.96 million b/d, and that full-year demand in 2025 was expected to be 103.76 million b/d, an imbalance favoring buyers who are suddenly watching prices climb. More articles by John Kingston Onstage in Chicago, CHRW talks tech and staffing; RXO sees language order hitting capacity Logistics GDP share rose in '24, not likely to drop: CSCMP report California's suit on Congressional ZEV-related denial says federal action overreached The post Benchmark diesel price makes its biggest upward move since January appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
10-06-2025
- Business
- Yahoo
Benchmark diesel price turns higher as futures price rises
On the back of an increase in diesel futures prices that has risen more than 13 cents/gallon in less than two weeks, the benchmark price used to set most fuel surcharges rose Monday for just the second time in nine weeks. The Department of Energy/Energy Information Administration average retail price increased by 2 cts/g Monday to $3.471/g. It brings the price up from its prior week which had been a milestone: the June 2 price was the lowest since September 2021. The increase Monday, announced Tuesday morning by the DOE/EIA, was just the second increase in the last nine weeks. That run of falling prices began with the benchmark at $3.639/g on April 7, so that the latest price is still down 16.8 cts/g during that stretch. Oil prices in general have been moving higher in recent trading. Brent crude, the global crude benchmark, settled at $60.94/barrel on May 29. It rose five out of the next seven days to settle Monday at $65.29. The increases were continuing Tuesday. At approximately 10 a.m. Eastern, Brent had risen another 2% to $66.65/b. Ultra low sulfur diesel (ULSD) futures prices, which had been trailing crude in recent weeks, strengthened slightly more than Brent during that time, tacking on another roughly 2 cts/g in the spread between the price of ULSD and Brent. Market analysts are citing the undercurrent of trade talks between the U.S. and China, and the prospect of avoiding an even-wider trade war, as reasons for bullishness. The bear case for prices is based on the forecasts by agencies such as the International Energy Agency that global oil demand may struggle to add even 1 million b/d this year, a historically low number. Paired with that is the OPEC+ determination to continue unwinding output cuts that have been in effect since spring of last year, despite the supply/demand models that would seem to suggest such supply would swamp a market with such weak forecasts of demand increases this year. The other side points to the structure of the market and its unrelenting backwardation. In a perfectly balanced market, the price of oil going forward–or any commodity–increases with the calendar. The July market for ULSD, which is the first month currently being traded, would have a lower price than August, August would be lower than September, and so on. The structure is called contango and the rising price reflects the cost of storage and the time value of money. The opposite is backwardation, where the nearest month price is the highest price. The next month is less than that, and the next month is lower still. That structure reflects the fact that the most nearby barrel is the most valuable because of tight inventories. The backwardation in the ULSD market actually has headed the other way, with the backwardation narrowing, suggesting an easing of tight inventories. On May 15, the spread between the first month and second month ULSD was about 5.5 cts/g. On Monday, the spread settled at 1.75 cents, with the July contract worth that much more than August. Diesel futures prices, which had been trailing crude in recent weeks, strengthened slightly more than Brent during that time, tacking on another roughly 2 cts/g in the spread between the price of ULSD and Brent. The ULSD market actually has headed the other way. On May 15, the spread between the first month and second month ULSD was about 5.5 cts/g. On Monday, the spread settled at 1.75 cents, with the July contract worth that much more than August. But in the Brent market, the spread between first month Brent and six months out widened Monday to more than $2/b. It is a spread that has been all over the map, from $2.85/b on April 17, down to 22 cts/b on May 5 and then back out to more than $2/b Monday, only the fifth time since the start of May that it has exceeded that level. The backwardation is being cited by bulls as the basis for their view that the 'swamping' of oil markets by the increase in OPEC+ oil is not going to result in a sharp decline in price. Part of that view is that there are increasing signs of at least a temporary plateau in oil output in various parts of the world beyond OPEC+. An article in the Financial Times summed up that view. 'Big companies from non-cartel countries such as ExxonMobil, Shell and BP have of late found relatively few new oilfields,' the article said. 'Over the past five years, new non-shale discoveries have averaged at 2.5bn barrels a year — less than a quarter of the level of the previous three years, according to a Goldman Sachs analysis of the top projects in the sector. Given the long lead times between drill bit success and production, oil majors are still growing output from earlier discoveries. But, after 2027, pumping from conventional projects will start to fall. Similarly, US shale oil, which has been a huge driver of supply growth, is expected to peak in 2027, according to the US Energy Information Administration, and then start to decline.' More articles by John Kingston One-day stock slide at Proficient may be tied to somewhat bearish investor presentation Parts supplier FleetPride's debt rating cut by Moody's, outlook still negative Truck transportation jobs up year over year for first time since 2023: BLS The post Benchmark diesel price turns higher as futures price rises appeared first on FreightWaves.
Yahoo
03-06-2025
- Business
- Yahoo
Milestone: Diesel benchmark price lowest since September 2021
The benchmark diesel price used to set most fuel surcharges fell Monday to its lowest level since September latest average weekly retail diesel price published by the Department of Energy/Energy Information Administration is $3.451 a gallon. It was down 3.6 cents per gallon from the prior week and has now declined seven of the past eight Sept. 20, 2021, the price posted was $3.406 a gallon. Every price since then has been higher than what was posted this week. The next lowest came late last year, when a price of $3.458 a gallon was posted Dec. declines, offset in part by a 6-cent gain from two weeks ago, have taken the DOE/EIA price down 18.8 cents a gallon since the decline started after an April 7 posting of $3.639. The latest reduction in price comes against a backdrop of futures trading on the CME commodity exchange in ultra low sulfur diesel (ULSD) that has been mostly on a downward trend for almost three weeks, though the first two days of trading this week were significantly higher but would not be showing up yet in retail a recent May 14 high settlement of ULSD at $2.2061 a gallon, two steps backward and one step forward brought ULSD down to a settlement of $2.0172 on Friday. Futures prices moved up Monday despite the weekend news that the OPEC+ group would increase output in July by an additional 411,000 barrels a day, another in a series of increases of that magnitude that have been going on for several months. At this rate, the 2.2 million-barrel-per-day output cut OPEC+ has had in place going back in pieces to 2023 will have been completely unwound by the fall. ULSD settled at $2.0445 on Monday, a gain of 2.73 cents per gallon despite the increase, which had been expected. Prices Tuesday rose again, settling up 5.54 cents to $2.0999 a gallon. Despite the increases in the past two days, the larger picture for U.S. diesel is that the market is being weighed down relative to the crude market by demand that is not just weak in the short term, but is continuing a now-multiyear decline. The decline in diesel consumption compared to the past 10 years of data for the corresponding time at the end of May is of nonjet fuel distillates, a category that is almost 90% ULSD, was 3.65 million barrels a day in the week ended May 23, according to the latest weekly report of the EIA. It's the third consecutive year that the demand figure for the last week of May was less than in the prior it is because of upticks in intermodal service, better diesel engine efficiency, conversion of heating oil usage to natural gas (because heating oil is in that number) or a series of relatively warm winters in the U.S. Northeast where heating oil is the fuel of choice, the demand figure stands in stark contrast to the 10-year average for May's final weekly EIA report of 3.92 million barrels a day. Between 2015 and 2018, weekly U.S. nonjet distillate demand regularly topped 4 million barrels per weakness has pushed the spread between ULSD and world crude benchmark Brent to about 50 cents per gallon in recent days. Outside of a few days in March, that spread has regularly been well above 50 cents this year and was more than 60 cents at the start of 2025. (However, numbers in the 40s were regular occurrences last year.)The weakening spread means diesel has been on a steeper decline in recent weeks that has not been seen in crude markets. Since that recent May 14 high, Brent was down 2.2% through the Monday settlement, but ULSD is down 7.3%. That stability in crude was noted Monday in an interview on CNBC with Helima Croft, the managing director and global head of commodity strategy at RBC Capital Markets. Referring to statements from OPEC that demand for oil remains healthy, Croft said that 'they're saying the market can take these barrels.' 'If you look at where prices are right now, we have not had a major sell-off since OPEC+ announced they were going to start putting more barrels on the market,' Croft said. 'We're not in the 70s, but given all the concerns about the China-U.S. trade war, hanging in in the mid-60s for Brent prices isn't so bad for a number of countries that have some spare capacity.' Brent settled Monday at $64.63 a barrel. It last settled above $70 on April 3. Tuesday's settlement was $65.63b, up $1. More articles by John Kingston Georgia tort reform aims to change practices in judicial 'hell hole' A Lego approach helps prepare Manhattan Associates' TMS for tariff chaos BMO's Q2 earnings show no improvement in credit conditions for trucking The post Milestone: Diesel benchmark price lowest since September 2021 appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
20-05-2025
- Business
- Yahoo
After surge in diesel futures price, retail prices catch up, benchmark rises
The diesel benchmark price used for most fuel surcharges took its biggest one-week leap Monday since January. The Department of Energy/Energy Information Administration average weekly retail diesel price rose 6 cents a gallon to $3.536. It ends a streak of five consecutive declines and is the biggest increase since the price of Jan. 20. But the price now is only 0.2 cents a gallon more than where it was four weeks ago, on April 21. The futures price for ultra low sulfur diesel (ULSD) on the CME commodity exchange had risen for much of the first two weeks of May. With the normal lag of retail prices to futures and wholesale prices, the jump in the benchmark was not surprising. ULSD on CME climbed from a recent low of $1.9766 a gallon on May 7 to reach as much as $2.1713 a week ago on May 13. Much of that rise was in sympathy with a general rebound in most asset classes following the Trump administration's decision to back off the most punitive tariffs for Chinese futures have slid since then, settling Monday at $2.1277 a gallon. Oil prices are managing to hold reasonably steady despite the continuing drumbeat of bearish supply/demand news. The latest set of numbers came from the monthly report of the International Energy Agency last week. The closely watched supply/demand report said the annual rate of demand growth in the first quarter was 990,000 barrels a day but that the rate of growth would slide to an annualized rate of 650,000 barrels a day for the remainder of the year. Excluding COVID years, it is rare to find an annual increase of less than 1 million barrels a day in the annual growth of petroleum. The IEA also forecast that growth would be 740,000 barrels a day in 2025 and 760,000 in 2026, also numbers that would be considered far from robust. (The IEA noted that the 2025 estimate is slightly higher than the prior month's forecast.)The IEA said the low rates of growth could be attributed primarily to two things. One is 'economic headwinds.' But a second is what the IEA said are record sales of electric vehicles worldwide, which the agency has been saying for many months has been a bearish factor in the market for the marginal barrel of consumption, which is where the price is set. Another factor that has been cited for the fact oil has not fallen further than it has already is the level of global inventories of all petroleum products and crude. The IEA reported that may be shifting, with significant global stock increases in March. But the agency also said global inventories of 7.7 billion barrels was 'well below' the five-year average for the month. The tightness of inventories can be seen in the continuation of the futures market in a backwardation structure. In backwardation, the price declines as it moves out on the calendar. For example, in the current ULSD market, June is the first month contract. July is next and it is priced less than June. August is less than July, and so on. The spread has been volatile recently, but the first month has been firmly in a backwardation between first and second month for all of 2025, reflecting those tight inventories. When stocks are tight, the most valuable barrel is one that can be delivered as soon as possible; the backwardation is reflecting that. In the background to the market is the continued realization that the OPEC+ group is not deterred by falling prices – with global crude benchmark Brent dropping below $70 a barrel in early April and now just a few dollars more than $60 – and will go ahead with its plan to gradually unwind its production cuts. However, the monthly report of S&P Global Commodity Insights showed that in April OPEC+ output was essentially unchanged from March, even though the group on paper was expected to increase its output by about 140,000 barrels a day. More articles by John Kingston Georgia tort reform aims to change practices in judicial 'hell hole' New Jersey, feds take opposite paths on independent contractor rulesState of Freight takeaways: Freight crash may turn into sudden revival The post After surge in diesel futures price, retail prices catch up, benchmark rises appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
