The average price of diesel rose last week in all regions nationwide. California is the most expensive place to buy the fuel, with a gallon costing $3.929, followed by the West Coast at $3.731. Diesel prices in California have climbed $1.02 per gallon in the past year. The Gulf Coast had the lowest price at $3.012 a gallon, up 5.7 cents from last week and up 63 cents in the past year, EIA reported.
Traders on the Nymex sent the price of West Texas Intermediate crude oil futures higher May 14 to $71.17 per barrel, up 47 cents.
Tom Kloza, the global head of energy analysis with the Oil Price Information Service, described the rise in fuel prices as “relentless.”
“Gasoline, crude oil, diesel and jet fuel are all at their highest prices since November 2014,” said Kloza, who predicts diesel will see a continuing move upward in the next six months because of demand for the fuel in emerging markets.
Kloza believes there will be a “wild third quarter” for fuel prices, with demand outstripping supply at times and crude oil per barrel rising to trade for more than $80 per gallon.
“For drivers, filling up their truck will get more expensive and that will roll through the freight marketplace,” Kloza said.
Multiple factors are affecting the pump prices of gasoline and diesel. There is lingering after-shock from President Donald Trump’s decision to take the United States out of the international nuclear accord with Iran, the fifth-largest oil-producing nation in the world. However, oil prices rose but did not skyrocket after the president’s announcement, indicating that traders already had factored the withdrawal into their pricing analysis.
The U.S. Treasury Department announced the week of May7 that the United States would reimpose sanctions on trade with Iran after certain 90-day and 180-day wind-down periods.
Also May 14, OPEC revised upward its forecast for global oil demand growth for 2018, though it warned that economic growth worldwide was uncertain due to sanctions, tariffs and the U.S. withdrawal from the Iran deal.
OPEC’s Monthly Oil Market Report for May stated that a one-time oil glut has been cut due to a 2017 agreement among suppliers to reduce production. Oil inventories among industrialized nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017, according to the report from the Organization of Petroleum Exporting Countries.
Meanwhile the U.S. rig count remains strong, tallying 1,105 as of May 13, up 1% from the previous week, according to Drillinginfo.com, which tracks the rig fleet using GPS units.