For the Quarter Ending December 2022
In the North American region, the Diesel price trend fluctuated during quarter IV of 2022. Initially, during the first month of Q4, prices inclined on the back of rising inflation amid high demand from global importers due to production cuts by OPEC+ refineries, as many refineries went under maintenance turnaround, which caused a fall in the inventory levels. After that Diesel price trend shifted, and the prices witnessed a reduction due to a decline in demand from importers like China due to declined consumption from the power and logistics sector amid a rise in covid cases. In the final month of the quarter, prices inclined again due to a contraction in refinery run rates as a precaution amid freezing temperatures and firm demand for fuel. At the end of the year, Diesel prices in the USA settled at USD 5.26/gal.
Diesel prices showcased mixed sentiments during quarter IV in Asia. In India, prices decreased initially due to firm inventory levels because of previously declined offtakes during monsoon. Diesel prices increased at the end of the quarter due to increased demand from the power sector during winter. While in China, prices increased during the first month due to increased demand for fuel from the agriculture sector and upstream supply shortages from OPEC+ due to production cuts. Then the trend shifted, and prices decreased from mid-quarter till the end of Q4 due to weak demand from the power and logistics sector amid covid related restrictions. At the end of Q4, Diesel prices in China settled at USD 1044/ton.
At the beginning of Q4, Diesel prices in Germany settled at Euro 2.1/L. The diesel price trend shifted sentiments during the initial week of Q4 prices soared due to high upstream costs amid supply shortages from Russia and production cut by OPEC+ and then suddenly declined due to a decrease in upstream prices on the back of a decline in demand from the importers. During the mid-quarter, prices remained stable and rose slightly due to increased input costs. In the final month, prices declined due to sluggish offtakes amid sluggish fuel demand than expected due to milder winter.
For the Quarter Ending September 2022
Diesel prices decreased throughout quarter III of 2022 in the North American region. A consistent drop in upstream crude oil prices reduced the production costs of Diesel throughout the quarter on the back of a reduction in demand from Asian importers. From the second month of Q3, Diesel prices fell noticeably due to a significant decline in the American Truck Tonnage Index and indicated less consumption. Also, the reduction in manufacturing activities declined consumer demand for fuel and offtakes. It increased domestic inventories, and after a plunge of 4.6% in the previous quarter's discussions, Diesel prices in the USA settled at USD 4.9/gal.
In China, Diesel prices decreased consistently due to reduced demand and weak upstream Crude oil prices. During summer, demand from China and the southeast countries declined in the Asian logistics segment due to a reduction in operational rates during summer on government instructions. On the other hand, in India, a stable price trend was observed on the back of reduced demand sentiments by the consumers during the monsoon and a reduction in construction and logistic activities. After an average decrease of 7.4% in the previous quarter's prices, Diesel discussions in China settled at USD 1110/ton. At the same time, Diesel prices in India witnessed INR 94.24/Litre at the end of quarter III of 2022.
A fluctuating price trend of Diesel was observed in Europe during Q3 of 2022. At the beginning of the quarter, the prices decreased due to a reduction in upstream crude oil prices. However, in the mid-quarter, the price trend revived, and prices surged sharply on the back of crude oil imports at high prices from the US and a simultaneous depreciation of almost 6% of the Euro against the USD. Towards the end of the quarter, the product prices decreased because of a reduction in offtakes. Due to the rise in inflation, the demand plunged from the consumer end. Subsequently, at the end of Q3, Diesel prices in Germany settled at USD 1.96/L.
During the second quarter of 2022, the Diesel prices in the North American region observed a constant gyration in the market trajectory amidst the fluctuating Crude Oil market on a global scale. Since the sanctions imposed on Russia by the U.S. and the E.U., Several nations have decided to restrategize to source Crude Oil from other means. Therefore, several northeast Asia players were observed to lean toward the US WTI crude supplies, and in response, the prices for the WTI have soared to historic highs during the second quarter of 2022. This gyration in the upstream energy cycle has impacted the prices of Diesel in the overall North American region.
In the second quarter of 2022, Diesel prices in the Asia Pacific region witnessed a constant fluctuation in the global energy market. The value of the upstream Crude Oil soared amidst the geopolitical tensions among the major economies. The Northeast Asian and pacific players that source hefty volumes of Crude from Russia have restrategized to source from an alternative amidst the sanctions imposed on Russia. Whereas China and India consistently procure their Crude Oil cargoes from Russia after the authorities put a hefty discount on the offers for Russian Ural Crude. Therefore, the overall market dynamics for Diesel showcases different trend on a sub-regional basis.
During the second quarter of 2022, the Crude Oil market in the European region observed a persistent gyration besides a consistent bullish trend. This market development came after the imposition of retaliatory sanctions on Russia's energy supplies. In June, the E.U decided on a complete embargo on the Russian Ural with some exceptions. The demand remains high, and the discussions for Diesel in the European market soared to the historical high amidst the high inflation in the regional markets. At the same time, the IEA Global Crude Oil market outlook indicated that the demand for Crude would likely surpass the pre-pandemic levels. The absence of a major supplier will probably support the inflation with a possible chance for a recession in the western regions.