Diesel Price Upside Momentum to Slow After Recent Jump
Carrier Margins May Tighten Further Due to Geopolitical, Meteorological Factors
Key Takeaways:
- U.S. diesel exports recently have exceeded 1 million barrels per day, according to Gas Buddy.
- The most recent week’s average retail price of $3.868 a gallon was 10.8% above the $3.491 a gallon from the same week in 2024.
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Retail and futures diesel prices have risen in recent weeks, but analysts see fairly limited opportunity for upside in the immediate future.
However, price increases are more likely than usual for this time of year, adding to fleet owners’ worries.
The reported Nov. 18 that the national average on-highway diesel price was $3.868 a gallon, up from $3.837 in the prior week and $3.620 in the week that ended Oct. 20.
Double-Digit Percentage Increases
The most recent week’s retail price average was 10.6% higher than the $3.497 low for 2025 posted in the week that ended May 5 and 10.8% above the $3.491-per-gallon price posted in the same week a year earlier.
Futures prices were even more volatile of late. Front-month CME diesel futures were trading below $2.55 a gallon on Nov. 20, having topped $2.70 on Nov. 18 after soaring from Nov. 13 onward in particular. A month earlier, the front-month futures price was below $2.15 on Oct. 16.
“Diesel prices didn’t just rise; they rocketed straight up, hitting a level not seen in 19 months!” Price Futures Group’s veteran analyst Phil Flynn noted in his Nov. 19 daily commentary.
Geopolitical Factor
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“It’s a headline-driven rally,” said David Thompson, executive vice president at Powerhouse, a Washington-based brokerage. “Most of the immediate dynamics have been driven by the Ukraine-Russia situation,” Thompson told Transport Topics on Nov. 19, noting that Ukrainian attacks on refineries and unloading facilities have taken place across the length and breadth of Russia.
Most recently, Rosneft’s Ryazan refinery outside of Moscow closed after a Nov. 15 drone attack.
It’s currently a very strong market for diesel globally, GasBuddy Head of Petroleum Analysis Patrick de Haan said in an interview Nov. 19.
U.S. Exports Robust
De Haan
U.S. diesel exports have been relatively robust of late, more than 1 million barrels per day, de Haan noted. A high percentage has been shipped to Latin America and South America, he added.
And if Ukraine continues its attacks on Russian infrastructure at recent success rates, it could be a game changer, de Haan said, adding: “That’s what I’m most worried about.”
“It’s really tricky being able to pick this going forward,” he said. “There’s almost too many wild cards to be able to tell you how this will play out.”
The futures market volatility and the possibility of U.S. sanctions on Russian oil boosted U.S. refineries’ profit margins.
The U.S. Gulf Coast diesel crack spread reached $51.90 a barrel Nov. 19, the highest seen since February 2024.
Maintenance Outages
A lot of U.S. refineries have been on maintenance outages of late, both planned and unplanned. However, refinery utilization is back up to 90% of capacity.
“The cracks are going to start cracking,” de Haan said, acknowledging the pun.
The coming few weeks of the calendar year typically tend to see weak diesel prices.
Although diesel inventories are relatively tight — distillate stocks are 6.5% below the five-year average — ahead of what could be a cold start to the upcoming winter, analysts said there is going to be more pressure on the downside.
Still, a sharp cold snap, particularly in the Northeastern states where heating demand could spike, may turn the market in the opposite direction.
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That’s not out of the question, with meteorologists expecting a phenomenon known as a “sudden stratospheric warming” to disturb the position of the polar vortex, leading to frigid temperatures in larger parts of North America as early as late November.
Flynn quipped: “I don’t think you’re going to be able to leave your turkey outside to thaw as temperatures may plummet by Thanksgiving.”
Through the rest of 2025 and into early 2026, analysts TT spoke to warn that a combination of events in Russia and Ukraine plus colder-than-normal weather closer to home does have some potential to hurt carriers’ margins.
“I might be a little more concerned about the upside [than normal] between now and the end of the year,” said Thompson.
De Haan, meanwhile, warned: “Diesel could become a runaway freight train over the winter if some of these catalysts activate.”
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