US diesel prices fall for third straight week, hit 2025 low

Benchmark diesel prices – the basis for calculating the popular fuel surcharge – have fallen to their lowest level since early 2025, although the diesel futures market is showing signs of a slight rebound.

According to weekly prices released by the US Department of Energy/Energy Information System (DOE/EIA), the average effective price as of Monday rose 2 cents per gallon to $3.514 per gallon. The last price lower than that was on December 30, 2024, when the year ended at $3.503 per gallon.

Still, this is the third straight week of declines for benchmark diesel. The decline over the past three weeks has totaled 12.5 cents per gallon.

The latest decline comes as ultra-low sulfur diesel (ULSD) futures have begun to recover after weeks of trading below $2.10 per gallon.

The April 10 settlement for ULSD on the CME was $2.0464 per gallon, and it has since risen to $2.1755 per gallon on Monday—a gain of 13 cents in 11 trading sessions.

However, ULSD was down about 2% on the day by around 11 a.m. EDT on Tuesday.

However, the decline may be temporary given the timing of the month.

One factor that could cool wholesale and retail prices is the rollover of the nearest-month ULSD contract. After Wednesday’s trading session (April 30), the May contract will expire and the June contract will become the front month.

This is especially important because the market is currently in a state of “backwardation” – meaning the nearest month contract is priced higher than the next month contract. Conversely, in a normal or surplus market, the price structure is “contango”, with the next month contract priced higher to reflect storage costs and the time value of money.

When there are concerns about inventory supply, the market often moves into backwardation. Although the market outlook appears weak, many data points to low inventory levels relative to historical averages over the same period.

The current backwardation for ULSD is around 4 cents per gallon – meaning the May contract is about 4 cents more expensive than the June contract – and the differential widened to 7.7 cents on Monday.

This means that when the May contract expires on April 30, the current price increases in the latest contract – which have pushed up future fuel prices and raised the risk of higher wholesale and retail prices – will be “fall” as the lower-priced June contract replaces it. This is expected to have a dampening effect on prices.

Despite lower seaborne volumes and trucking demand as cargoes are held up in exporting countries, the diesel market has outperformed crude. On April 10, CME ULSD was trading at a premium of nearly 54 cents a gallon to Brent, the global benchmark. By Monday, the premium had widened to 60.75 cents.

Crude oil prices rose slightly last week, partly due to a rebound in equity markets. But a confrontation is brewing within the OPEC+ group – efforts to curb output are being challenged by Kazakhstan’s increased oil exports, despite being a member of the Russia-led OPEC+ group.

In an interview with Reuters, Kazakhstan’s Energy Minister Erlan Akkenzhenov said the country would “act in accordance with national interests with all the ensuing consequences” – a signal that it may not comply with its OPEC+ production quota, which it has already violated.

Kazakhstan’s overshooting of its quota is a serious problem within OPEC+ and risks further undermining the group’s efforts to control supply.

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Source: Phaata.com (According to Freight Waves)

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