The benchmark diesel price saw its largest one-week decline in two months after several days of falling prices in the futures market. The Department of Energy reported a 4.3 cents/gallon decrease to $3.711/g, the lowest since August 25. Prices remain within a tight range since August, with a high of $3.766/g on September 8.

Oil markets rebounded slightly after OPEC+ decided not to add as much oil to the market as expected. Ultra low sulfur diesel on the CME exchange dropped 19.25 cts/g in late September/early October trading. OPEC+ plans to increase output by 137,000 barrels/day in November, slightly less than anticipated.

With speculation of a possible supply glut in 2026, the oil market faces uncertainty. Longer-term models predict an excess, but heavy Chinese buying has absorbed added supplies. The market structure may need to change to accommodate excess oil, with prices potentially dropping to incentivize storage.

Javier Blas describes a potential supply glut as a “tsunami,” emphasizing the need for a market structure that encourages storage of excess oil. The current backwardation structure may need to transition to contango, with forward prices higher than current prices. The market may need to lower current prices to stimulate storage demand.

Read more at Yahoo Finance: Diesel benchmark falls as talk of oil glut emerges again