Diesel surcharge benchmark dips as US distillate stocks run 14% below average
The benchmark diesel price that sets most fuel surcharges fell this week after three straight increases, according to FreightWaves, as more crude out of the Gulf reached the market. Carriers get a small break on the surcharge line. It comes with a warning attached.
The stock picture
US distillate stocks are running 14% below the five-year average for this time of year, per EIA data out Wednesday. Crude went the other way. Commercial crude inventories rose 900,000 barrels for the week ending September 25, bringing stocks to 427.3 million barrels, about 2% above the five-year average. Plenty of crude, thin diesel. Refiners are the ones cashing in: Morningstar DBRS says the global diesel squeeze is lifting US refining margins.
The US oil industry is warning that diesel prices may not return to normal for a year, the Financial Times reported. For a hauler pricing a contract, that means the surcharge could stay elevated even if the weekly benchmark ticks down. Heating oil is climbing as winter demand builds, and it pulls on the same distillate barrel that diesel comes from.
Russia's export ban
Russia extended its ban on diesel, marine fuel, and gasoil exports through October 31, its government said Wednesday. The ban has been in place since summer. It keeps Russian diesel off an already tight global market for another month, and it is part of why crude jumped this week as diesel and gasoline supplies shrink. US operators don't buy Russian barrels, but the world price sets the floor under what buyers here pay.
Dyed diesel relief
Arkansas Gov. Sarah Sanders suspended penalties on dyed diesel for farmers and loggers, letting them run off-road fuel on the highway while prices are high. Several other states have made similar temporary moves, per Mansfield Energy. The relief has limits. Dyed and clear diesel still carry different taxes, and temporary enforcement relief doesn't make them interchangeable, so a jobber selling into those markets should read the state notice before assuming the rules changed.
One more item worth a line for fleet operators: powertrain converter Janus Electric is pushing swappable electric batteries for diesel tractors into California and Texas, per Trucking Dive. Small volume today, but it is a hedge some fleets are starting to price against diesel that stays expensive.
What to watch
Whether the surcharge benchmark keeps sliding as Gulf crude flows, or reverses if distillate stocks stay 14% under average heading into winter. Watch the Russia ban past October 31. And watch heating oil, which competes for the same barrels and could keep diesel bid through the cold months.