Diesel price pauses
to catch breath
Jun 17, 2008 1:56 PM
The average price of diesel in the United States paused last week to take a breath and remained at $4.692 per gallon, the same as the week before, according to information from the Department of Energy (DOE).
Ultra low sulfur diesel followed suit without an increase from the week before at $4.702 per gallon. In the same time period, low sulfur diesel climbed a fraction of a cent to $4.606 per gallon.
While carriers may feel some slight relief this week, the monthly analysis from DOE isn't comforting. International fuel consumption, a drop in supply by countries outside of the Organization of the Petroleum Exporting Countries (OPEC), and low surplus production capacity appear to account for much of the upward trend in oil prices.
Slow growth in non-OPEC supply is coinciding with disruptions in supplies from some OPEC countries, such as Nigeria. Ongoing geopolitical concerns in several producing countries, including Venezuela and Iran, have contributed to oil price volatility.
DOE said the market remains concerned that the cushion of surplus production capacity of less than two million barrels per day (almost all located in Saudi Arabia) and/or stocks is insufficient to protect against possible changes in supply or consumption, especially as the summer hurricane season approaches. The absence of a Saudi commitment to add capacity beyond its current goal of 12.5 million barrels per day adds to the uncertainty about the adequacy of future supply capacity growth.
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