The news
US diesel averaged $6.13 a gallon this week, down 16.5 cents from the previous week but up from $3.84 a year earlier, according to the Energy Information Administration's weekly price survey. Distillate stocks, which include diesel and heating oil, fell 3.6 million barrels to 99.3 million in the week ended Oct 30, their lowest level since May 2003.
Distillate demand over the past four weeks ran 8.7% above a year earlier, while refineries operated at 94.5% of capacity.
Stocks were 12.3 million barrels, or 11%, below year-earlier levels.
Why it matters: Diesel buyers have little supply cushion heading into winter. The EIA expects distillate inventories to remain below average through 2027, keeping pressure on the market.
The details
Distillate stocks have fallen about 25% since January, even as refineries produce more than they did a year ago. Inventories are now 13% below their five-year seasonal average, according to EIA data.
Refineries produced 5.15 million barrels of distillate a day, up from 4.71 million a year earlier.
Exports also rose, reaching 1.34 million barrels a day from 1.2 million.
Diesel has remained above $6 a gallon since mid-September, roughly $2.30 more than a year ago. Prices jumped nearly $1 a gallon in the first week of March as the Iran war threatened tanker traffic through the Strait of Hormuz. They reached a record $6.53 on Sept. 21.
Regional prices last week ranged from $5.91 on the Gulf Coast to $7.27 on the West Coast.
Regular gasoline averaged about $4 a gallon this week, making diesel roughly $2.13 more expensive.
The East Coast faces the tightest supply, with distillate stocks 32% below their five-year average in September. The EIA expects inventories to remain 20% to 30% below average through winter because the region consumes more distillate than its refineries produce.
National distillate stocks are also expected to remain below their 2021-2025 average through the end of the EIA's forecast period in 2027.
Heating oil prices are up more than 30% from last winter, the agency says.
What’s next
EIA’s October outlook expects diesel to average $4.92 a gallon in the first quarter of 2027 and to stay above $4 through next year.
Photo: Robert F. W. Whitlock / Wikimedia Commons, CC BY 2.0
