Average US retail diesel reached $5.5477 per gallon on Thursday in AAA's daily survey, within 15 cents of the postwar high of $5.5689 set on April 9 and more than 25 cents above the August 10 level where the current run of increases began.
The widening gap between crude oil and refined product is doing most of the work. On February 27, the last trading day before military action began between Iran on one side and the United States and Israel on the other, Brent crude settled at $72.48 per barrel and ultra low sulfur diesel settled at $2.596 per gallon. By Wednesday, Brent had settled at $91.62 and ULSD at $4.4523. That works out to a 26.4% rise in crude against a 71.5% rise in diesel over the same span. RBOB, the futures contract used as a proxy for gasoline, rose 56.5%.
A simplified crack spread comparing second month ULSD against first month Brent stood near $36.55 per barrel on February 27. It crossed $90 per barrel early this week, likely for the first time on record, putting crude at roughly half the value of the diesel refined from it.
Jeffrey Currie, former head of commodities at Goldman Sachs, described the disconnect in a CNBC interview this week. "Nobody consumes crude oil but refineries," he said.
Analysts point to several factors behind diesel reacting more sharply than crude or gasoline, including Ukrainian strikes that cut into Russian refining capacity and tightened distillate supply worldwide.
Source: FreightWaves - https://www.freightwaves.com/news/diesel-still-ripping-higher-than-the-rest-of-the-barrel-heres-why