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US On-Highway Diesel Fuel Prices Hit 2016 Highs

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Diesel fuel prices

The EIA (U.S. Energy Information Administration) released its “This Week in Petroleum” report on June 2, 2016. The government agency reported that US on-highway diesel fuel prices rose by 1.3% week-over-week and closed at $2.38 per gallon on May 30, 2016. Diesel fuel prices rose for the seventh consecutive week to hit their highest level so far in 2016.

However, diesel fuel prices have fallen 18% compared to the same period in 2015. Prices are lower than last year due to mild winter weather in 2015–16 compared to 2014–15.

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Heating oil and diesel fuel price forecast for 2016

The EIA forecasts that US on-highway diesel fuel prices will average around $2.27 per gallon in 2016 and $2.64 per gallon in 2017. Heating oil could average around $2.12 per gallon in 2016 and $2.55 per gallon in 2017. Diesel fuel and heating oil prices are driven by US distillate inventories. Distillates consist of diesel fuel and heating oil. Read the last part of this series to learn more about US distillate inventories.

Impact on energy stocks and ETFs

Higher gasoline and diesel fuel prices benefit US refiners such as Western Refining (WNR) and Northern Tier Energy (NTI). The recent uptick in crude oil prices also benefits oil and gas exploration and production companies such as Laredo Petroleum (LPI) and Triangle Petroleum (TPLM).

The ups and down in oil and gas prices also affect ETFs and ETNs such as the PowerShares DWA Energy Momentum ETF (PXI), the ProShares Ultra Bloomberg Crude Oil (UCO), and the United States 12 Month Oil ETF (USL).

Read the next part of the series to learn about gasoline inventories. 

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