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Retail diesel rises as futures tumble on Strait of Hormuz reopening hopes
The DOE/EIA benchmark retail diesel price rose to $5.348 per gallon for a fourth straight week, even as CME ULSD futures slid on the expectation of a deal to reopen the Strait of Hormuz.
Diesel prices at the pump rose even as the futures market dropped sharply on renewed optimism around a potential deal to reopen the Strait of Hormuz, according to Yahoo Finance. The weekly Department of Energy, Energy Information Administration average retail diesel price fell Monday but was published Tuesday at $5.348 per gallon, up 3.5 cents per gallon, marking the fourth consecutive week the benchmark increased.
Over the same period, diesel futures moved in the opposite direction as the market priced in the possibility of ending the strait closure. Yahoo Finance reports that CME ultra low sulfur diesel, or ULSD, fell on recent headlines and was particularly volatile after the U.S. and Israel launched attacks on Iran in early March.
In the three trading days ending Monday, CME ULSD dropped by 3.68%, 2.09%, and 5.93%, with the Monday settlement at $3.8772 per gallon, the lowest since July 13. Yahoo Finance adds that by about 9:40 a.m. Tuesday, ULSD was down 4.34%, or 16.81 cents per gallon, to $3.7091 per gallon, which would also be its lowest settlement since early July if it held.
The retail market also faces uncertainty around potential price changes following President Trump’s call on oil companies to lower retail prices. Yahoo Finance notes that the retail reaction could depend on how any developments play out after the company earnings backdrop showed profitability surged during the second quarter.