The latest weekly fuel price report from the Department of Energy/Energy Information Administration says that store owners don’t know what to do in this market where prices change so quickly.
The ULSDR.USA data shows that market prices in the US have gone from a high of $3.288 per gallon on August 10 to a low of $3.227 per gallon last Thursday, before going back up to $3.36 per gallon on Monday. These kinds of changes in bulk fuel prices are well known to store owners, and they can make it harder for them to figure out how much to charge at the pumps. Most store owners don’t have the money or time to change that quickly.
DOE/EIA Reports Slowing of Retail Fuel Price Increases Despite Market Uncertainty
This may explain why the DOE and EIA say that retail fuel price increases have slowed down over the past week, despite the recent uncertainty in the market. After four straight increases of 9.9 cents to as much as 22.2 cents per gallon, the weekly price, which most gasoline taxes are based on, only went up 1.1 cents per gallon to $4.389/g last week. Because of this, the average price for most gasoline fees has gone up by 58.3 cents per gallon in just five weeks, after going up by 57.2 cents the week before.
Fluctuations in ULSD prices on the CME commodities market cause concern for diesel’s health.
The price of ultra low sulfur gasoline on the CME commodities market has had the most effect on the fluctuation of trade data. On August 7, ULSD was sold on the CME commodities market for $3.0155 per gallon. It went up to almost $3.20 in just 24 hours. It went down to $3.028 after those four days. The price fell to $3.16 after another three days. On Monday, the price went down by 4.35 cents per gallon, taking it down to $3.1162.
Analysts are worried about diesel’s health going into harvest and then the winter heating seasons. This instability and the fact that the price has been going up overall despite some big drops have made them even more worried. Last week’s inventory numbers from the EIA didn’t do much to ease these fears. Even though this is a time of year when stocks tend to grow, the amount of ultra-low sulfur fuel in the U.S. is now at about 83% of its average for the year.
The East Coast faces supply concerns as two major refineries undergo maintenance.
All along the East Coast, there are more and more reasons to worry. In his weekly report, energy analyst Philip Verleger quotes OPIS price expert Tom Kloza as saying that two big East Coast plants will soon have to go through a lot of repair. Maintenance is often done at refineries in the spring and fall.
A study written by Kloza and quoted by Verleger said that the Irving Oil plant in New Brunswick, Canada, which handles 320,000 barrels of oil per day, would be stopped for about seven weeks. Verleger says that it is a big source of supplies for the East Coast of the United States.
Delta’s Monroe Energy Plant Shutdown Could Result in Decreased Supply and Reduced Inventory Accumulation
Also stated is the fact that Delta’s Monroe Energy plant, which produces 185,000 barrels of oil per day and is near Philadelphia, will soon be shut down. It will likely be closed for almost two months.
According to Verleger, the closures could potentially result in a decrease in supply of approximately 140,000 b/d (of distillates) for a period of 60 days. Additionally, it is expected that East Coast inventory accumulation will be reduced by seven to eight million barrels compared to the corresponding period in 2022.
East Coast fuel prices are close to the national average despite supply concerns.
Last year, the average price of fuel on the East Coast was much higher than the national rate. In May 2022, the DOE/EIA price on the East Coast hit a high of 33.4 cents per gallon, more than the national average. This was caused by a lack of supply. In the late fall of last year, the spread went down for a short time before going back up. It reached a high of 27.1 cents just after Christmas before leveling off. Until April, this fee was still more than 10 cents per gallon.
This week’s data shows that retail gas prices on the East Coast were only 2.4 cents more than the average price for the whole country. Also, there have been no signs that the spot markets are getting tighter. He says that because there aren’t enough refineries on the East Coast, they have to buy oil from other countries. This could be fixed by increasing production in the Gulf Coast area of the United States. So far, no actual squeeze has been reported in any of the other U.S. spot markets.
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