Ultra low sulfur diesel on the CME commodity exchange settled Tuesday at $4.6773 per gallon, an increase of 18.36 cents or 4.09 percent, setting a new high for the contract since hostilities began in the Middle East. The prior mark was $4.6084 per gallon on March 20.
The settlement appears to be the second highest in the history of the contract, which started as a heating oil contract before quality specifications narrowed the gap between the two middle distillates. The only higher settlement was $5.1354 per gallon on April 28, 2022, a reading that came one day before the May contract expired and that traders attributed to short covering. Prices fell more than $1 per gallon the following session.
Retail prices lag the futures market. The Department of Energy and Energy Information Administration average weekly retail price fell 5.3 cents to $5.5999 per gallon, effective Monday and published Tuesday. That decline is only the second in the last eight weeks, and it follows a record of $5.562 per gallon set a week earlier. The weekly figure is the basis for most fuel surcharges paid by shippers.
No single development drove the two day climb. Reporting points to the loss of Middle East crude grades that yield high volumes of diesel in refining, attacks on Russian refineries and export facilities, and tight global inventories heading into winter, when diesel competes with heating oil demand. ULSD settled at $4.4948 per gallon on Aug. 21 before the run higher.
Source: FreightWaves - https://www.freightwaves.com/news/by-the-numbers-diesel-futures-surging-tuesday-to-possible-post-war-high