Diesel prices are once again down this week, dropping an average of 43 cents a gallon since last week and by 73 cents since last year. The decrease is driven by the drop in demand for fuel during the COVID-19 pandemic and by the unpredictable environment of the oil markets, both here and abroad.
According to the most recent report from the U.S. Energy Information Administration, the average diesel price in the U.S. is $2.437 per gallon, a drop from last week’s $2.48 price.
On the demand side, the easing of state lockdowns in Georgia, Ohio, and Texas may alleviate some of the stress around the historically low oil market, with fuel consumption sure to rise with some businesses reopening.
West Texas Intermediate crude oil futures dropped to an unprecedented negative $37.63 last Monday, forcing oil companies to literally pay refineries to take the oversupply off their hands. They went back up, then fell again to $12.20 a barrel on April 28 after a 25% drop the previous day.
OPEC oil prices have also continued to decline, with prices currently at around $13.30 a barrel, a 7% drop from the previous day of trading. (The OPEC basket is a weighted average of prices for petroleum blends produced by member countries of the Organization of the Petroleum Exporting Countries.) According to an article on Oilprice.com, Mohamed Arkab, energy minister of OPEC’s rotating president Algeria, predicted that oil prices will recover in the second half of the year due to the OPEC+ production cuts and the measured lifting of lockdowns. He projected oil prices will rise to $40 a barrel.
The Oil Price Information Service in a blog on its website on April 27 noted that total U.S. crude oil storage levels are within 1-2 weeks of the all-time highs established just over three years ago. “Growing supplies continue to keep a lid on any upside potential for the market, as storage levels continue to fill up and tankers laden with oil hover off the coasts are waiting for a return of demand.”