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US On-Highway Diesel Fuel Prices Rose for the First Time in 10 Weeks

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Diesel fuel prices  

October NY Harbor ULSD futures fell by 3.5% and closed at $1.42 per gallon on August 31, 2016. Prices are trading close to one-month lows due to the unexpected rise in distillate inventories. We’ll look at distillate inventories in Part 9 of this series.

The EIA (U.S. Energy Information Administration) reported that US on-highway diesel fuel prices were up 1.3% to $2.40 per gallon on August 29, 2016—compared to the previous week. Prices rose for the first time in the last ten weeks.

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

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Heating oil and diesel fuel prices forecast for 2016  

The EIA reported that heating oil prices could average $2.11 per gallon in 2016 and $2.60 per gallon in 2017. Similarly, on-highway diesel fuel prices will likely average $2.30 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 in 2016 should have a negative impact on US refiners and oil producers such as Comstock Resources (CRK), Warren Resources (WRES), Valero Energy (VLO), Tesoro (TSO), Northern Tier Energy (NTI), and Western Refining (WNR).

Volatility 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 DB Crude Oil Double Short ETN (DTO), the Direxion Daily Energy Bear 3x (ERY), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

In the next part of this series, we’ll take a look at gasoline inventories. 

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