Regional differences in diesel markets were apparent in January as the US saw declines while Europe experienced increases reflecting differences in supply fundamentals, regulations, seasonality of demand, and trade flows between the two regions. Refinery activity, inventory levels, and policy changes influenced pricing direction of diesel fuel markets during the month and were closely monitored by market participants.
The US saw diesel prices drop by roughly *.** during January, primarily because of ample supply domestically and softer market fundamentals. Refinery usage was still relatively high, with inventories continuing to build, alleviating short-term concerns about product availability. Furthermore, decreased export demand from international markets has caused nearby countries to become more dependent on their own refined products, weighing on the US diesel market. Although there was some short-term support for heating oil demand with cold weather, this did not offset the larger effects...
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