For the Quarter Ending September 2023
Third quarter front month prices of Diesel in North America have been lower than the previous month's trading prices. US diesel demand has fallen despite economic growth, according to an EIA report. Consumption in the trucking, freight, and construction industries was reported as moderate at the start of this quarter. Diesel prices began climbing upwards from August amid tighter-than-expected crude oil supplies. The number of US oil rigs dropped, and a fire at a Louisiana refinery created some ambiguity in the Diesel market. Moreover, during August, North America battled with inflation. After a statement on the possibility of further rate hikes by US Federal Reserve Chairman Jerome Powell, the dollar rose to a 3-month high on Friday. Higher interest rates can result in a sluggish economy. A decrease in domestic crude oil inventory this month supported the price rise further in September. According to EIA’s recently released petroleum status report on Sept. 27, U.S. crude oil inventories decreased by 2.2 million from the week ending Sept. 15 to the week ending Sept.22. The Baker Hughes count dropped by 11, standing at 149. Moreover, according to traders, oil refineries cut down the number of maintenance schedules in the Diesel unit since they wanted to earn more margins amid high Diesel and Gasoline demand and less inventory. Thus, as of September, Diesel prices in North America closed at USD 4.52 per gallon, DEL-Washington.
Front month Diesel prices in Q3 showed a significant uptick backed by oil production cuts by OPEC+ countries. China’s diesel exports were weak throughout July. Chinese players diverged towards feeding petrochemical plants, rather than to feed oil refining plants to produce transport fuel such as Diesel, Gasoline, and Jet fuels, to cater to domestic petrochemical demand. Thus, the prices as of 31st July closed at USD 1090 per MT, Ex-Beijing, with an incline of 14.3% compared to the previous month's Diesel prices. Supply cuts by major oil-players and anxiety about a global economic downturn led to a Diesel price increase in emerging economies like India. Moreover, the AAP government increased retail prices of diesel by 88 paise with added tax. Demand in the power sector was high due to eccentric weather and higher-than-normal temperature driven by El Nino. Prices gained stability in August. Factors such as an increase in shipments of Iranian crude oil to Asia, China’s skeptical economic growth, increased operations in domestic refineries, a hotter summer, India’s increasing crude oil consumption all balanced the Supply-demand curve. In September, the announcement of Saudi Arabia and Russia’s voluntary production cut till the end of this year supported the price hike in China. However, India’s Diesel prices witnessed a significant drop of 12.6 percent since the Indian Government reduced duties on Diesel. High Diesel export volume to Europe and low freight rates in the Asia-Europe lane supported India’s trade deficit balance amid lower domestic fuel prices. Thus, as of September 29, Diesel prices in India closed at USD 1.17 per litre, Ex-Delhi.
At the start of the second quarter this year, Diesel prices in Brazil registered a decline of 2.57% from the previous month. The major reason behind this decline was an overflow of discounted Russian crude oil. Diesel prices in Brazil bounced back with a slight hike after Petrobras, a Brazilian state-run oil company, raised its Gasoline and Diesel prices in the second week of August amid a global oil price hike. A tight market amid global demand was reported in August. According to the emerging market league table, Brazil maintained its second rank with the highest import cover and top stock market performance. However, the Brazilian IPCA, the benchmark inflation index observed by the Central bank of India, jumped to a higher-than-expected forecast of 4.2% y-o-y in August, exacerbating the pace of rate hikes by the Central government. Diesel prices in South America’s largest economy witnessed a significant hike since the price hike announcement both by domestic players Petrobras and internationally by OPEC countries. According to EIA’s recently released report, the oil rig count in the west American region decreased. On the international front, Crude oil prices could further surge because of a recent attack by Hamas on Israel. Thus, Diesel prices in Brazil as of Sept. 29 hovered around USD 5.8 per gallon, Ex-Rio de Janeiro.
For the Quarter Ending June 2023
The prices of Diesel in the US market have declined in the US market as of first half of Q2 and then decremented in the second half. This was due to lower demand from the downstream power and logistic sector in the first half of Q2 as high inflation and rising interest rate continue to grip the market sentiments and then in the second half as rising economic stability and controlled inflation rate created positive Diesel market sentiments. Furthermore, feedstock crude oil prices declined which led to further decline in prices of Diesel in the US market. In Addition, there was weak cost support from the price of Natural gas in the first half of Q2 and then increment in the second half of Q2 support price trend in the Diesel market. Additionally, the demand from the international market has remained weak which further led the prices of Diesel downwards. In Addition, the plants were operating at stable rate with weak demand from the downstream industry which led to adequate inventories level to meet downstream demand. Thus, at the end of the quarter, the prices of Diesel were stated at USD 3.92/Gal.
The prices of Diesel in the Chinese market have shown constant decrement as of Q2, this was due to decline in demand from the downstream industry like fuel and logistic. Furthermore, declining exports and deflation problem in the China created overall negative market sentiments for Diesel. Furthermore, there was free flow Russian crude oil in the market which led decrement in the upstream crude oil prices. Furthermore, coal prices have decremented in the Chinese market as there was free flow of cheap imports which led to decrement in input production costs. In Addition, the plants were operating at lower due to weak downstream demand. Moreover, there was wait and watch sentiment in the market due to constant declining prices. Whereas, in the Indian market prices throughout Q2 remained stable on the backdrop of constant demand from the downstream industry like fuel, logistic and power. Thus, at the end of the quarter Q2, the prices of Diesel were stated at USD 954/ton.
The Diesel market in Brazil has declined throughout the Q2, this was due to decrement in the prices of feedstock crude oil, rising Diesel imports from the Russian market. Furthermore, crude oil prices dropped which led to decrement in input production cost. There was free flow of imports from the international market which led to adequate inventories in the market. Additionally, the plants were operating at normal rates with weak downstream demand which led to overflow of inventories in the market and bound seller to offer discount to increase market transaction. In addition, due to constant declining prices there was negative market sentiments and there was wait and watch sentiments in the market buyers. Moreover, feedstock Crude oil prices decremented which led to drop in the production cost. Furthermore, there was hesitance in the market for procurement of large orders. Thus, as of end of Q2 in June the prices of Diesel were stated BRI 5.05/ltr FD Rio de Janeiro Brazil.
The Diesel price trend showcased bearish movement throughout the 1st quarter of 2023. Initially, prices fell amid declined exports to the importers and weak supply chain activities amid the decline in upstream WTI Crude oil prices, which reduced the cost support. During the mid-quarter, the orders diminished from the Asian importers amid sanctions on Russian products and increased production rates. Due to this, the domestic inventory levels remained firm till the end of the quarter, and prices decreased marginally amid volatile upstream Crude Oil prices and shifting cost support. At the end of the quarter, Diesel prices in the USA hovered at USD 4.13/gal.
The diesel price trend showcased mixed sentiments in the Asian region during Q1 of 2023. In the first month of the quarter, Diesel prices surged due to increased Crude Oil prices by OPEC+ and decreased diesel fuel exports by the US. However, from the mid-quarter, prices fell due to increased oil imports amid improvement in supply chain activities. Due to increased imports and a decline in freight charges, inventory levels remained firm, and prices fell till the end of Q1 amid volatile upstream costs. While in India, Diesel prices stagnated from mid-quarter till the end of the quarter by the domestic suppliers amid increased Russian Crude oil imports and production rates. At the end of Q1, 2023, Diesel prices in China were witnessed at USD 1105/ton.
The Diesel price trend shifted sentiments in the South American region during quarter 1 of 2023. Initially, the price trend was stable, and prices rose marginally due to a rise in demand from importers. At the same time, the federal reserve exempted fuel taxes amid ease in the inflation in the country. During the mid-quarter, prices fell amid increased production rates and increased imports of Russian Crude oil amid imposed European ban on seaborne imports of Russian Crude oil from February 5. Consequently, the Diesel price trend remained bearish till the end of the quarter. The federal board further reduced fuel taxes to improve offtakes and sales of diesel. At the end of the quarter, the Diesel prices in Brazil hovered at Brazilian Real 5.94/ltr, Min.