Diesel prices hit record highs

On Monday (June 6), the U.
S.
Department of Energy (DOE)/Energy Information Administration (EIA) released an average retail price of diesel at $5.
703 per gallon, an increase of 16.
4 cents, surpassing the record
of $5.
623 per gallon set on May 9.

The price of ultra-low sulfur diesel (ULSD) on the Chicago Mercantile Exchange (CME) climbed last week, and as of last Thursday, the price was up nearly 28 cents from May 27, laying the groundwork for the price increase assessed by the
DOE/EIA.

Since May 20, the price of ULSD on the Chicago Mercantile Exchange has risen by 62.
1 cents, a 10-day
streak.
Since the beginning of the year, ULSD prices have risen by about $2.
09/gallon
.

Diesel became the biggest winner in the oil market
.
On May 20, the price of a barrel of diesel was 44~45 US dollars higher than that of a barrel of Brent crude oil, which is a huge price difference
compared to historical data.
As of Monday, the spread even exceeded $
61 a barrel.

On Monday, international oil prices fell slightly, and as of the close of the day, the price of light crude oil futures for July delivery on the New York Mercantile Exchange fell by $0.
37, or 0.
31%, to close at $118.
50 per barrel; London Brent crude futures for August delivery fell $0.
21, or 0.
18%, to settle at $119.
51 a barrel
.

Despite this, after several rounds of consecutive rises, international oil prices are still at historical
highs.
On June 2, OPEC and non-OPEC producers held their 29th ministerial meeting by video, deciding to raise monthly production by 648,000 barrels per day in July, up from the previous monthly increase of 432,000 barrels per day
.
But this decision may only be a drop in the bucket, and many institutions have raised their oil price forecasts
.

Barclays raised its 2022 Brent crude price forecast by $11/b and its 2023 forecast by $23/b, citing larger ongoing disruptions in Russian supplies following EU sanctions
.
Barclays expects Brent crude to average $111/b this year and next, while West Texas Intermediate (WTI) averages $108/b
over the same period.

Citibank raised its Brent crude price forecast for the second quarter by $14 to $113/b, the third quarter and the fourth quarter by $12 to $99/b and $85/b respectively, to an average price of $75/b in fiscal 2023, $16 higher than the
bank's previous forecast.

Citi expects the U.
S.
to begin lifting sanctions on Iran in the first quarter of next year, expecting market supply to increase by 500,000 b/d and 1.
3 million b/d
in the second half of the year.
Citi had expected that the lifting of sanctions on Iran would increase crude oil supply
in the market by mid-2022.

Goldman Sachs expects Brent crude oil prices of $140/b in the third quarter (previously expected $125/b), $130/b in the fourth quarter (previously expected $125/b) and $130/b in the first quarter of 2023 (previously expected $115/
b).