Average prices quoted for delivered bulk diesel fell in February and are now around 2.5% above where they were 12 months earlier, data compiled by RHA has shown.
That left the average February price at 122.48ppl plus VAT, down by 4.9% from January’s 128.84ppl, although the latter represented a slight increase on December 2022. February’s figure was the lowest average since the same month in 2022 when it was 119.48ppl, and down by 21.2%, or 32.9ppl, from the average high of 155.41ppl seen in June 2022.
Little changed in Brent during the first two months of 2023, the trade body’s figures show. It dropped by less than 1% in February, to US$83.54 per barrel, while at the same time sterling weakened by 1p against the US dollar. Brent thus remained 15% below the US$98.23 per barrel of February 2022.
By February this year, sterling had lost over 11% of its value against the US dollar since the start of 2022 and was still trading below its rate of June 2022, when the oil crisis was at its peak. That aside, a barrel of oil adjusted to sterling was £69.04 on average in February against £72.76 12 months earlier, although bulk diesel price changes lag those of crude.
RHA suggests that the ongoing war in Ukraine makes speculation around future diesel prices difficult, but it notes that the Chinese economy will have a major influence on trajectory. Demand for oil there is expected to grow in 2023.
The trade body adds that if interest rates in the US increase further then the price of Brent is likely to remain stagnant, although at the time of writing the scope for that to happen was cooling. Ongoing fears of recession factor further into that, but refinery maintenance in Europe will likely see production fall with a potential impact on diesel prices.
The United States Energy Information Administration (EIA) predicts via its short-term energy outlook that the Brent average will increase slightly in Q2 2023, but beyond that it forecasts consistent quarter-on-quarter falls to US$75.36 per barrel in Q4 2023. EIA further believes that refiner prices of diesel in the US will drop by 20% between Q1 2023 and Q3 2024 before rallying slightly to close next year.
Nevertheless, the Administration forecasts that 2024’s average refiner price of diesel in the US will be almost one-third below that seen in 2022.