USA’s Diesel Prices Continue to Descend in February 2023
- 10-Mar-2023 12:49 PM
- Journalist: Nicholas Seifield
Texas (USA): Diesel prices in the USA witnessed a decline of around 7.3% on month-on-month basis and settled at USD 4.2/gal at the end of February 2023. Diesel prices have been consistently falling in the domestic market because of the firm availability in the country. Because of the anticipated increase in demand during winter, the country increased its refinery run rates and Diesel imports since October 2022.
At the same time, Middle Eastern exporters increased their Diesel supply due to their increased refining capacity, which kept the domestic inventory levels firm amid an improvement in supply chain activities. On the other side, during the 2nd half of February, Diesel production costs eased due to a decline in Crude Oil prices.
A shift in Diesel trade flows was witnessed during February 2023. With the ease in Covid related restrictions, China increased its exports, which increased Diesel fuel demand in the logistics sector. However, with the increased freight charges, the Chinese importers shifted their interest toward Russian fuel supplies. Diesel imports decreased from China, and domestic inventory levels remained firm. On the contrary, European buyers increased their demand during the 2nd half of the month because of the ban on Russian Crude oil and fuel in the first week of February 2023.
The USA’s manufacturing Purchasing Manager’s Index also decreased in February amid a contraction in domestic manufacturing activities. At the same time, Federal Reserve increased its interest rates to curb the rising inflation in the country.
As per the analysis, “Increasing interest rates by the federal reserve will likely cause a slowdown in the Economy, and Crude Oil and distillate demand will remain weak. Diesel demand will likely remain stable in the short term; however, Diesel prices will increase in the Q2 of 2023 amid the driving season which will prompt the improvement in consumption rates. Furthermore, as per EIA, the import orders are expected to remain uncertain from Europe after another fresh round of sanctions imposed by EU on several Russian petrochemicals and their derivatives.”