This article has been reprinted from the Aug. 22 USDA Grain Transportation Report.
The Energy Information Administration’s (EIA) most recent Short-Term Energy Outlook reports crude oil prices are expected to remain stable or slightly lower through the end of the year as distillate fuel production rises.
“EIA estimates that distillate fuel yields at U.S. refineries averaged 29.6 percent in July, the highest for any July on record. In both 2019 and 2020, EIA expects refiners to continue increasing distillate yields.
"This, in combination with rising refinery runs, is expected to lead to record levels of distillate production in both years.
"EIA expects high U.S. distillate production to support rising U.S. distillate fuel exports to help satisfy global demand for lowsulfur bunker fuel that meets new maritime fuel specifications, which come into effect in January 2020.”
Lower crude oil prices and strong distillate inventories apply downward pressure on diesel fuel rates.
Over the past 6 weeks, U.S. average diesel fuel prices have fallen more than 6 cents per gallon.