The national average price per gallon of diesel gasoline headed down for the 15th consecutive week, according to data issued this week by the Department of Energy’s Energy Information Administration (EIA).
With a 2.7-cent decline, this week’s national diesel average came in at $2.480. This is a lower sequential decline compared to the four previous weeks, which saw declines of 4.1 cents, 3.8-cent, 7.3-cents, and 8.1-cents, respectively.
Going back to the week of January 13, when the national diesel average was $3.064, diesel prices have fallen a cumulative 58.4 cents through April 20. What’s more, the national weekly average has been below the $3 per gallon mark since the week of February 3, when it was fell to $2.956, following a $3.01 average for the week of January 27.
On an annual basis, this week’s average is down 66.7 cents, topping annual spreads of 61.1-cents, 54.5 cents, 49.2 cents, and 42.1 cents, respectively, over the previous four weeks.
Recent reports have noted that gasoline could fall below $2 a gallon in the coming weeks, driven by oil prices that are plunging after major producers recently failed to agree to a plan to prop up crude prices earlier this month and by fears of declining energy demand due to economic disruption from the coronavirus.
Earlier this month, Russia, Saudi Arabia, and the United States reached a deal on the “largest [oil] production cut ever negotiated,” according to a New York Times report. Prior to this deal being reached, Russia and Saudi Arabia had been in a price war, and the U.S.-based oil companies felt the pain in the form of collapsing prices, the report said.
“Before the coronavirus crisis, 100 million barrels of oil each day fueled global commerce, but demand is down about 35 percent,” the report noted. “While significant, the cuts agreed to on Sunday still fall far short of what is needed to bring oil production in line with demand. The plan by OPEC, Russia and other allied producers in a group known as OPEC Plus will slash 9.7 million barrels a day in May and June, or close to 10 percent of the world’s output.”
West Texas Intermediate Crude is currently trading at $0.84 per barrel on the New York Mercantile Exchange.
A report in The Wall Street Journal explained that U.S. oil futures fell below zero for the first time ever today, which it called “a chaotic demonstration of the dwindling capacity to store all the crude that the world’s stalled economy would otherwise be using.” And it added that the “historic low price reflects uncertainty about what buyers would even do with a barrel of crude in the near term. Refineries, storage facilities, pipelines and even ocean tankers have filled up rapidly since billions of people around the world began sheltering in place to slow the spread of the deadly coronavirus.”