Diesel prices are on the rise, with ultra low sulfur diesel futures settling at the second-highest price in almost two years. The Department of Energy reports a 9.4 cents/gallon increase, bringing the average weekly retail diesel price to $3.624/g, up 16.5 cts/g in total after eight weeks of decline.

The price of ultra low sulfur diesel is approaching the highest levels it has been for over 2 ½ years, settling at $2.6462/g on Monday, up 7.82 cts/g. The current cold snap is pushing diesel prices higher at a faster rate compared to crude, with the spread between Brent and ULSD widening.

Several factors are contributing to the surge in diesel prices, including cold weather causing operational issues at U.S. refineries. Refineries like INEOS, Pemex, Shell, and LyondellBasell are experiencing problems, leading to flaring gas. Expectations of increased demand for heating oil due to the weather are also impacting prices.

The U.S. is seeing a premium in diesel prices over European markets, which could lead to increased exports from Europe to the U.S. and discourage exports from the U.S. to Europe. Reports of oil production curtailment in West Texas may further impact U.S. supply and demand dynamics.

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