After an Initial Rise, U.S. Diesel Prices Fall Incessantly in November 2022
- 01-Dec-2022 6:20 PM
- Journalist: Yage Kwon
According to the data sources, Diesel prices in the U.S. tilted negatively during November 2022. Initially, prices surged at the beginning of this month and settled at USD 5.333/gal during the first week of November. The reason is that the U.S. was facing diesel shortages due to oil shortages, particularly in the east coach, just a few days before the Midterm election in the U.S. on 8th November 2022. Additionally, seasonal demand increases during winter and refinery closures affected Diesel inventories and contributed to the Diesel price increase.
However, towards the end of the month, Diesel prices decreased and settled at USD 5.141/gal at the week ending on 28th November 2022, decreasing 3.6% from the initial week of the month. Reduced demand from importers like China due to zero-Covid controls raised the domestic inventory levels towards the end of the month.
As per the EIA reports, Diesel fuel consumption rose in the U.S. agricultural sector during autumn, and simultaneously the use of heating oil also escalated in the residential sectors. At the same time, Diesel inventory levels remained below the five-year average in 2022 in all major trading regions because of the limited distillate exports from Russia and trade disruption after Russia invaded Ukraine in February 2022. The other reason for reduced global Diesel supplies is the refinery strike at total energies in France in the second half of the year, as per the sources. Furthermore, the domestic production of Diesel in the Northeast was less than the previous levels since the Philadelphia Energy Solutions refinery shut down in 2019 due to bankruptcy.
As per the EIA analysts, “Diesel supplies and inventory levels are likely to remain limited amid ongoing constraints on global refining capacity. Furthermore, the distillate refinery margins remain moderate at the beginning of quarter 1 of 2023 as seasonal demand for the fuel decreases after winter and refinery production remains greater than usual because of strong refining margins.”