Why Did US Diesel Futures Rise This Week?



Diesel futures prices 

October NY Harbor ULSD futures rose 1.7% and settled at $1.42 per gallon on September 21, 2016. Diesel futures rose despite the larger-than-expected rise in distillate inventories.

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US on-highway diesel fuel prices 

The EIA (U.S. Energy Information Administration) reported that US on-highway diesel fuel prices fell 0.4% to $2.38 per gallon on September 19, 2016—compared to the previous week. Prices fell for the 12th time in the last 13 weeks.

US on-highway diesel prices hit $2.43 per gallon for the week ending June 13, 2016—the highest level for 2016.

Heating oil and diesel fuel price forecasts for 2016

The EIA reported that heating oil prices could average $2.11 per gallon in 2016 and $2.58 per gallon in 2017. Similarly, on-highway diesel fuel prices will likely average $2.31 per gallon in 2016 and $2.70 per gallon in 2017.

Heating oil and diesel fuel prices are driven by US distillate inventories. Distillates consist of diesel fuel and heating oil. Please read the last part of this series to learn more about US distillate inventories.

Impact on energy stocks and ETFs  

Lower gasoline, diesel fuel, and crude oil prices could have a negative impact on US refiners and oil producers such as Comstock Resources (CRK), Triangle Petroleum (TPLM), Range Resources (RRC), Valero Energy (VLO), Northern Tier Energy (NTI), and Western Refining (WNR).

The ups and downs in crude oil and gasoline prices also impact ETFs and ETNs such as the VelocityShares 3x Long Crude Oil ETN (UWTI), the United States Gasoline Fund (UGA), the iShares Global Energy ETF (IXC), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

In the final part of this series, we’ll take a look at US distillate inventories.


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