Diesel fuel is gaining strength compared to crude oil, with the spread between the two showing a slight pause after widening. The average retail diesel price dropped by 0.7 cents/gallon to $3.805/gallon, the first decline in three weeks. ULSD on the CME settled at $2.4266/gallon, down from the previous week.

Diesel futures show a significant increase compared to crude oil. While WTI is down 2.11%, settling at $66.71, ULSD is up over 10%, settling at $2.4266. RBOB gasoline is about 30 cts/g less than ULSD, after reaching a spread of 37 cts/g last week.

Investors are bullish on middle distillates, expecting low diesel inventories to support prices. Open interest in ULSD on the CME and ICE is high, reflecting strong investor activity. Goldman Sachs predicts diesel margins may slow but remain above long-run averages due to global processing constraints.

Energy economist Philip Verleger highlights diesel’s role in driving oil prices higher due to global supply constraints. U.S. production emphasis on light crudes limits diesel yield, while restrictions on non-OPEC countries reduce supply of diesel-rich crudes. Current market conditions suggest diesel prices may continue to rise.

Read more at Yahoo Finance: Benchmark diesel price down, but fundamentals are pointing higher