Last Week

The festive season has certainly brought some gifts for Fuel Intensive consumers as Oil & Diesel Platts Rates continue the descend downwards 2-year lows in spite of a host of factors that would traditionally have kept rates elevated. For treasury teams looking to achieve budgeted rates for their 2024 spend, this can be perceived to be opportune level to capture fixed pricing for the coming year.

Oil Prices fell to circa 74 USD/bbl lows last week, before rebounding to 75.65 USD/bbl on Friday, on the back of some sour Chinese Economic Data and lowered demand forecasts for oil from the IEA. OPEC’s Oil supply cuts have had no effect on oil prices, and any risk to supply from the ongoing geopolitical risks in the Middle East have all but faded. Saudi Arabia and OPEC’s hold on oil seems to be fading, as the shift returns to the US, which is quickly becoming the world’s largest producer of Oil. 

Traded Diesel Platts Prices fell sharply lower before rebounding slightly. The average wholesale price of Physical Diesel Prices fell at 105.66 ppl, according to the RAC. 

The Week

This week has started with rise in crude oil prices, continuing the momentum from Friday’s surge and prices could prove supportive due to the intended massive purchasing of Oil by the US, which has a mandate to refill its Strategic Petroleum reserves. The U.S. federal government’s announcement of purchasing up to 3 million barrels for the strategic petroleum reserve fuelled this upward trend. In a series of three transactions, the government has already acquired a total of 9 million barrels, initiating the process of replenishing the SPR after withdrawing over 180 million barrels last year to stabilize fuel prices.

Currently, prices align with the Department of Energy’s preferences. However, the anticipation of price hikes following the DoE’s buying announcement has materialized. Despite this, the West Texas Intermediate (WTI) remains comfortably below the Department of Energy’s upper limit of $79 per barrel.

The RAC is still warning that consumers of Diesel are being ripped off, with forecourt margins still not reflecting the falls in wholesale prices. Diesel Wholesale prices have fallen by circa 15 ppl from October highs, and yet consumers have not seen these falls being reflected at the pumps. Physical Petrol prices have dropped below 145p per litre for the first time since November 2021. The recent falls in the traded price of Diesel represent a drop to lows not seen since June 2023, and currently sit at near 2-year lows overall.