Global Diesel Prices Show Mixed Trends Amid U.S. Decline, China’s Demand Slump, and Europe’s Export Surge

Diesel prices have been on a dynamic trajectory across key global markets, including the United States, China, and Europe in August. Each region has faced unique supply and demand challenges, contributing to distinct price movements. In the U.S., Diesel prices have continued to decline, aided by refinery premiums returning to pre-pandemic levels, after the anticipation of slightly inclining trend in August. Conversely, China has experienced a significant drop in Diesel demand due to economic headwinds and a shift towards LNG-powered trucks, while Europe has seen a surge in petroleum product exports amid fluctuating Diesel prices.

In the United States, Diesel prices have consistently fallen as the summer season winds down. The U.S. average price of on-highway Diesel fuel fell to USD 3.651 per gallon as of August 26, reflecting a decrease of 3 cents from the prior week. The decline has been influenced by a drop in crude oil prices, which fell by approximately USD 5 per barrel from July to August. Additionally, Diesel refinery premiums in the U.S. have returned to pre-pandemic levels, stabilizing around USD 20, which contributed to the downward trend in Diesel prices. Despite these positive developments, regional disparities persist. For instance, Diesel prices in California were the highest at USD 4.707 per gallon, whereas the Gulf Coast had the lowest price at USD 3.317 per gallon.

China’s Diesel market has faced significant pressure due to a sharp decline in demand, which fell by 11% year-on-year to 3.9 million barrels per day in June. This drop represents the largest percentage decline since 2021 and reflects the broader challenges facing China’s economy. The drop in Diesel demand has been largely driven by the slowdown in the property sector and the rising shift to liquefied natural gas (LNG) for heavy-duty trucks. Sales of LNG-powered trucks surged by 307% to 152,000 units last year, with LNG displacing an estimated 110,000 to 120,000 barrels per day of Diesel demand. Chinese refineries have struggled amid this backdrop, with oil refinery output in July falling by 6.1% from the previous year, marking the fourth consecutive month of decline.

In Europe, Diesel pricing has been influenced by a mix of factors, including increased petroleum product exports and fluctuating regional demand. Europe saw a 26% increase in petroleum product exports, reaching 1.27 million barrels per day in July, compared to 1.22 million barrels per day in June. Despite this rise in exports, regional oversupply and high refinery production levels have exerted downward pressure on Diesel prices. For instance, Diesel prices in Germany decreased by Eur 3 in the national average last week. The Miro group's 310,000 b/d Karlsruhe refinery in southwestern Germany maintained high production levels, while maintenance at Shell's Rhineland refinery reduced supply in Germany's west.

Looking ahead, the outlook for Diesel pricing remains mixed. In the U.S., continued crude oil price fluctuations and refining capacity will play pivotal roles in shaping Diesel prices. China’s Diesel market may continue to face downward pressure due to structural changes in energy consumption and ongoing economic challenges. Europe’s Diesel prices will likely be influenced by regional supply dynamics, refinery outputs, and the broader global oil market trends. The global Diesel market is poised for ongoing volatility as these regional factors continue to evolve.