When will diesel prices start to fall?

[Johhny04]

Oil is now trading at below $1.50 on the market. Crazy. When are we going to be seeing the price drop at pumps.

 

[Lex Tdi]

It's started the retailers just havent started to lower, we buy fuel direct for our fleet from a wholesaler... price is based on 2 week wholesale market avg.
Bill we got Friday avg $1.65 per gallon, cant find it anywhere in KY at the pump for under $2.49.

 

[nicklockard]

Yep, WTI went negative $31/bbl today briefly I saw.

How do I take delivery? I'll let you pay me $21k to take delivery of a rail car of WTI!

 

[turbobrick240]

I can picture it now, swimming pools full of free crude oil all over the nation!

 

[Powder Hound]

Yep, WTI went negative $31/bbl today briefly I saw.

How do I take delivery? I'll let you pay me $21k to take delivery of a rail car of WTI!

Yeah, that's the real trick, isn't it? If you have an empty tank that can hold a contract's worth of crude you'd be having fun. Once in a while the futures market gets really strange.

Cheers,

PH

 

[turbobrick240]

Contagion contango. I wouldn't be the least bit surprised if diesel is $4+/gal in a year from now.

 

[IndigoBlueWagon]

Contagion contango. I wouldn't be the least bit surprised if diesel is $4+/gal in a year from now.

Although US production seems to be able to ramp up pretty quickly when prices rise, and of course they'll want to do that, I could see some volatility as worldwide production and demand fluctuates.

I like high fuel prices. Over and over it's proven to be the only thing that causes people to reduce consumption.

 

[kjclow]

That and a world wide pandemic!

 

[Mongler98]

So, unconfirmed sources tell me, fuel demand (trucking, jets, shipping, rail roads, and mass transit is down 70% from what it was, mass transit and shipping and railroads bump it from 50% to 70%. Is this true? I can see why! I was also told it costs a few million to shut down a plant and start it back up, not accounting labor loss and all the things around it. On an upside, road work is up because liquid assault price is down and is a prime time to do road work. This stuff could go on for another month or 2 at the very least. I see an economical exploit to be had here. Not sure how, but I dont think it involves pools full of oil!

 

[IndigoBlueWagon]

That and a world wide pandemic!

That, too.

 

[turbobrick240]

Although US production seems to be able to ramp up pretty quickly when prices rise, and of course they'll want to do that, I could see some volatility as worldwide production and demand fluctuates.
I like high fuel prices. Over and over it's proven to be the only thing that causes people to reduce consumption.

Yeah, I think a sharp increase in fuel prices is the most effective way to break the ridiculous trend toward huge, gas guzzling SUV's and trucks in the U.S. .

I'm not very familiar with oil field operations, but if there are a lot of bankruptcies and wells getting shut in, I think it might take a while to ramp back up to pre-pandemic production levels. But most likely months rather than years.

 

[nicklockard]

So, unconfirmed sources tell me, fuel demand (trucking, jets, shipping, rail roads, and mass transit is down 70% from what it was, mass transit and shipping and railroads bump it from 50% to 70%. Is this true? I can see why! I was also told it costs a few million to shut down a plant and start it back up, not accounting labor loss and all the things around it. On an upside, road work is up because liquid assault price is down and is a prime time to do road work. This stuff could go on for another month or 2 at the very least. I see an economical exploit to be had here. Not sure how, but I dont think it involves pools full of oil!

Any of your thoughts on what it could be?

 

[Mongler98]

Any of your thoughts on what it could be?

what? an exploit?
hoarding fuel?
no idea
buying stock when its low?
i'm not a risk taker like that.
and i was wrong, over 90% of air traffic is shut down and that is by far the largest consumer of fuel in the kero/diesel part of refinery.
aside from shipping cargo flights, there is basically an entire shutdown of the skys.
fuel was always affordable anyways, a few hundred bucks a month for serious commuters vs the equivalent of a pack a day of smokes.
I'm not saying that saving money is bad or stupid but i am saying that its probably one of our least of worries right now. you do know that more people will die from unemployment ,every 2% unemployment increase the US population death rate goes up 24%!
just my 2 cents.
im sure in a few years after the dust settles prices will be up again.

 

[turbobrick240]

what? an exploit?
hoarding fuel?
no idea
buying stock when its low?
i'm not a risk taker like that.
and i was wrong, over 90% of air traffic is shut down and that is by far the largest consumer of fuel in the kero/diesel part of refinery.
aside from shipping cargo flights, there is basically an entire shutdown of the skys.

Not even close. We consume 2.5 times as much ULSD as jet fuel here in the U.S. And that's the ratio in normal times.
https://www.eia.gov/dnav/pet/pet_cons_prim_dcu_nus_m.htm

Buying stocks when prices are low is generally good investment strategy. Though I choose to avoid investing directly in the fossil fuel industry for a number of reasons. I'm not even feeling great about my investment in a S&P 500 ETF despite timing the market bottom nearly dead on. Too much fossil fuel in the mix. I'll probably trade that investment for something I can feel good about asap.

 

[Tin Man]

When I drive to my locations I see a lot of 18 wheelers on the road. Essential commerce I'm sure. No EV 18 wheelers yet....

 

[IndigoBlueWagon]

When I drive to my locations I see a lot of 18 wheelers on the road. Essential commerce I'm sure. No EV 18 wheelers yet....

It'll be interesting to get some real data how drops in construction, fuel transport, auto transport, etc. affect overall diesel use in the US. It appears that the industry didn't anticipate the glut we have right now, surprisingly. If they had they could have stopped exploration and transport sooner and perhaps prevented at least some of the price crash. Given their lack of foresight until now, I tend to doubt any industry projections.

 

[Mongler98]

This is like extra credit. The people who dont need it will benefit.
Still have work (essential) then you can still afford fuel as regular price. Stuck at home with no job or as such, well too bad, guess getting supplies will cost a few cents less now.
One thing I do follow is commodities, only on the semi exterior though. Price of gold/fuel prices havealways been relatively equil in graph projections. UNTILL NOW.
So to me it will be interesting to see one price not follow the other.
As for s&p I'll buy more shared as things get worse (lower) swap for gold is still a tricky move as I foresee that gold will peak and soon as oil prices rise(do to economic growth when this is over) I project that gold will fall back down to 13ish. Who knows.
That's the move I would make. Also amazon stock is crazy atm.
As for fuel prices, i just filled all my containers so I'm good for 50 gallons of both gas and diesel. Love these truck stop pricing. One thing would be interesting to see is the price of auto parts and lubrication fall from lack of demand. When that happens (if it happens) it will be the mark of the low point. Another indication of the low point to watch for would be swap options and shorting positions on bank notes and mortgage packs. Just like in the housing market crash of 2006/8 there will be a down turn somewhere as demand shortens and supply increases. Construction businesses are booming right now to keep work flowing but no one is buying. The last bit is education, this could be the blow that leads to the bursting of the educational financial crisis we are building. So keep an eye out!

 

[turbobrick240]

Get some sleep Mongler. None of that made any sense whatsoever. Well, except for the bit about filling up your cans with cheap fuel. That wasn't a terrible idea.

 

[kjclow]

NC is shutting down a lot of road construction projects due to lack of fuel taxes coming in.

 

[nicklockard]

Is there a tradeable futures contract based on price volatility of gasoline or diesel?

 

[IndigoBlueWagon]

There are ETFs based on future contract prices, but I haven't seen one based on volitility. I'd be shocked if there isn't some kind of a diverative product out there, however. As traders like to say, if it has a price and the price fluctuates, they can make money on it.

 

[Hamman]

Diesel in my area hasn't dropped any more than 10 cents in the past month. Over the same time, RUG at some stations here has dropped to 96 cents. What gives?

 

[Mongler98]

Diesel in my area hasn't dropped any more than 10 cents in the past month. Over the same time, RUG at some stations here has dropped to 96 cents. What gives?

 

[turbobrick240]

Is there a tradeable futures contract based on price volatility of gasoline or diesel?

If I wanted to make a quick buck in fossil fuels, I'd be looking at some of the tanker companies. They are making huge profits storing excess crude. Nordic American Tankers (NAT) is a prime example. But longer term I think there are much larger returns to be had in wind and solar.

 

[Lightflyer1]

Or oil well owners with dry wells and some cash to invest. If it works for the Strategic Oil Reserve it should work for others as well. I don't know why this isn't done when times like this come around. Stock up when it is cheap!

 

[jjblbi]

We bought my wife's 2000 NB TDI in late 1999. Diesel was $.99/gal and $12-13 fill-ups were the norm.

My retired neighbor worked at Phila area oil refineries all his life. Every barrel of crude oil yields the spectrum of petroleum products from heaviest to lightest up the tower: asphalt, diesel, kerosene, gas, propane, butane, iso-butane are some. Diesel's relative higher price vs. gas is due to the further refinement needed to remove sulfur.

 

[Tin Man]

When ULSD was required, the official word was that the extra refining would cost about $.03 to $.05 per gallon more. The world market, however, now could accept export ULSD so the price went up higher. Refining costs are important but do not price a commodity on the open market where supply and demand set prices.

 

[jmodge]

$1.10 for offroad

 

[IndigoBlueWagon]

Saw $2.39/gallon for D2 near my home in SE MA yesterday.

 

[andreigbs]

$1.89 at my local Mobil, but still $2.39 at the Love's truck stop down the road. The truckers always get jipped.