Diesel price outlook moves lower
April 24, 2012
The gradual quieting of political rhetoric over Iran’s nuclear program has calmed global crude oil markets. Prices are down $9/barrel from their early March peak. U.S. refined diesel prices have responded after a month’s lag, dropping $.09/gal over the last two weeks. In the near-term it looks like prices are near their high point.
Diesel prices jumped from $3.95 in February to $4.13 in March. Pump prices in March were 18 cents higher versus February and 22 cents higher than last March. On a percentage basis diesel prices shot up from last month, but have been rapidly easing versus last year. Prices were up 4.4% from last month and up just 5.7% versus last year. Although most analysts project further near-term declines, the U.S. economy and truck market are both capable of healthy growth in 2012 at current price levels. That is good news for everyone.
The risk of a major 2012 oil shock is much lower than thought earlier this year. As such our price forecast has moved lower for the rest of 2012. Prices started the year off relatively weak but continue to move higher at a strong pace. The recent positive news out of the Middle East, combined with lower crude prices, has led us to reduce the price increases that we had built into the forecast. Our forecast for the middle of the year is still higher than we currently sit but is well below the level that we had last month. We now have Q3 average $4.17, down from last month’s $4.26.
With prices dropping last year starting in May and our outlook for pricing remaining strong we expect to see an increase in year-over-year gains during the late summer months. Look for gains to max out near 10% unless there is a dramatic surge in crude prices.
The scout’s motto holds ever true in effectively managing fuel costs. Pump prices have the knack of being quite volatile: whether it’s because of weather or crude oil prices or supply concerns or one of a hundred other reasons. Remember: fuel costs can quickly change. Be prepared.
About Our Fuel Outlook:
We are not fuel experts. Nor do we desire to be. But, fuel is first or second in your costs categories. You have to be prepared for swings in this category. Use these numbers as a rational basis for understanding where fuel costs are headed; knowing that even relatively little problems can create quite large (short-term) fluctuations in the oil markets.
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