East Coast distillate fuel inventories fell 32% below their five-year seasonal average in September, according to the U.S. Energy Information Administration's October Short-Term Energy Outlook, released Oct. 6. EIA expects inventories to recover but to remain around 20% below the 2021-2025 average through the coming winter, and to approach the five-year average only in the second half of next year.

U.S. retail diesel averaged $6.29 per gallon in September and gasoline averaged $4.35. EIA attributed the rise to higher crude oil prices and rising crack spreads, the margin refiners earn over crude. The agency described extreme tightness in diesel markets that raises crude demand as refiners work to meet diesel needs.

The outlook raised the Brent crude forecast to an average of $105 per barrel in the fourth quarter, $14 higher than the prior month's estimate. Brent is forecast to average $96 in 2026 and $84 in 2027. EIA assumes oil flows from the Middle East stay constrained through the fourth quarter, and the forecast includes exchanges of 40 million barrels of crude oil from the U.S. Strategic Petroleum Reserve announced Sept. 29.

For diesel, EIA forecasts a 2026 retail average of $5.19 per gallon, up 2.4% from the previous forecast of $5.07. The 2027 forecast is $4.49, up 2.0% from $4.40. The accompanying chart shows a net 2026 change of $1.53 per gallon in the U.S. diesel price, with Brent crude and the wholesale margin over crude accounting for nearly all of it. EIA forecasts a decline of $0.70 in 2027.

Source: U.S. Energy Information Administration - https://www.eia.gov/outlooks/steo/