By David Tanner, Land Line associate editor

A market analyst says that if Vegas were to put odds on what happens to diesel prices in the second half of the year, his wager would be on an increase. Tom Kloza, chief oil analyst for the Oil Price Information Service, says a steady month-long decline in diesel prices is part of traditionally weak global demand this time of year and that the lull could be short-lived.

“Historically, the second calendar quarter of the year is the weakest quarter for crude oil prices,” Kloza told Land Line on Tuesday, May 29. “With the exception of gasoline, it’s probably the weakest quarter for most petroleum products.”

Last week, oil prices hit a seven-month low while diesel prices were at their lowest point since February. The national average diesel price on Tuesday was $3.897 per gallon, down nearly 6 cents for the week and 23 cents during the past six weeks.

Market factors such as demand, the European economy, and political happenings in oil-producing countries affect the global market. Kloza says the factors have combined to keep diesel prices at bay the past few weeks.

An increase on the demand side could send prices higher this summer and later in the year, he adds.

“The one thing that is a little bit scary is diesel stocks are very low,” he said. “Diesel inventories in the U.S. and abroad are quite low. I think it’s a level field for the next few weeks, even a little weakness, but I would suspect we’re going to see mostly increases in the second half of the year. And diesel is actually going to be the product that outperforms gasoline and probably outperforms crude.”

Kloza says if he were a betting man, his wager would be on the national average price for diesel rebounding to $4 and above in the second half of 2012.

For the time being at least, the national average was still on the decline Tuesday according to the U.S. Energy Information Administration.

All regions of the U.S. except one showed a decrease of more than 5 cents during the past week, the EIA reported. The Rocky Mountain region saw a smaller decrease of just under 4 cents per gallon. California saw a decrease of 7.5 cents for the week.

Following are the regional averages reported on Tuesday by the EIA:

U.S. – $3.897, down 5.9 cents
East Coast – $3.940, down 5.9 cents
New England – $4.072, down 5.8 cents
Central Atlantic – $4.023, down 5.6 cents
Lower Atlantic – $3.854, down 6.2 cents
Midwest – $3.795, down 5.9 cents
Gulf Coast – $3.802, down 5.9 cents
Rocky Mountain – $3.948, down 3.9 cents
West Coast – $4.164, down 6.9 cents
West Coast less California – $4.089, down 6.3 cents
California – $4.228, down 7.5 cents

ProMiles reported the daily average for diesel at $3.887 per gallon on Tuesday, down two-tenths of a cent over the weekend.

Oil prices were rebounding on Tuesday but remained close to the seven-month lows seen in the past week. Domestic crude was trading at $91 a barrel in New York while European Brent crude oil was trading at $107. Both types are commonly associated with diesel production.

Kloza predicts those prices will likely inch back to $100 and $120 respectively during the second half of 2012.


Copyright © OOIDA

 

Drop, what drop? Its still $4.459 here.

 

What drop??? The jerkwitz down the road here is still $4.19 a gal.!! He loves his deezel so much he was huggin his pump!! In Ga. it was $3.79 ! go figuire.


Smokie

 

I just paid 3.89/gal about 5 miles out of town, 4.40 in town, go figure.

 

around here, gas has gone down quite a bit to ~$3.11

diesel, otoh, went to $3.89 (from $3.99) and has stayed put!

 

I live in CA near Los Angeles and paid $3.79/gal right off the freeway. Huh, go figure

 

Oops, Monday I got it for 3.659/gal. Kinda did a little jig while fillin up!
Edit: Just looked on gasbuddy. its 3.579 now! Time for another topoff.

 

What I don't get, they said today that crude oil inventories are at a 20 year high. Why aren't diesel prices reflected in the fact that crude is dropping? I thought I heard a few months ago that the US was flush with diesel fuel and started shipping it over seas. Heating Oil (similar to diesel) is trading around $2.71, add some taxes into it and it should be around $3.50 or less (at least in my mind which isn't saying much!!)

Diesel prices here in MT have not gone down much at all, still $3.99 here in Billings. Ugh...

 

CT state tax on diesel will be rising to 5 cents on July 1st to 51.2 cents per gallon.The highest in the region.This is getting ridiculous!!!

 

I thought everyone left CT a long time ago...with that tax increase, CT will only be second to CA in diesel tax (finally CT beat NY in something).

 

Same crap as usual. Gas drops .50 cents diesel drops .05 cents. Gas then goes up by .50 cents diesel goes up by .50 cents. Somthing isn't adding up. Rant over carry on.

 

Yes with the few cents per gallon saveings i can sell my house and move up to Lake Tahoe!

 

From just over a 100.00 give or take to about 87.00 respectivly to fill up I'll take it. Not big numbers but a 20 spot more in my pocket is better than nothing. About 3.79- 3.89 here now for diesel.

 

Without factoring the difference in the dollar between U.S and Canada , it's costing me $ 1.17 per litre which equalls $ 4.42 per gallon .

GETTING SCROOOOWED BIG TIME UP HERE !!!!!!!!

 

With Europe dropping into a double dip recession, and the World Economy tanking, demand will continue to decrease. Diesel is scarce because there is no need for it. There is nothing being manufactured that needs to be transported. Even Iran is backing down. Nice try David. I love it when an associate editor starts off with "a market analyst says". We are in deep trouble and the oil industry has finally figured out they are holding a recovery back.