US Diesel Price Stable, Brazil Sees Demand Decline Amidst Economic Factors

Texas (USA): The Diesel market in the United States and Brazil witnessed contrasting trends, reflecting distinct dynamics in each region. While the US market remained stable, characterized by balanced supply and demand, Brazil experienced a decline in demand amidst various factors influencing its market.

In the United States, the Energy Information Administration (EIA) projected an average on-highway fuel price of USD 4.01 per gallon in 2024 and USD 4.08 per gallon in 2025. Throughout March, the US Diesel market demonstrated resilience, with demand across sectors such as transportation, agriculture, and construction remaining steady. This equilibrium was influenced by seasonal variations and sustained economic activity, preventing any significant fluctuations in demand. Domestic Diesel production operated smoothly, meeting demand without causing shortages, while consistent imports complemented production, ensuring supply stability and price equilibrium.

Moreover, stable global crude oil prices supported consistent Diesel production costs and overall pricing stability. Adequate refinery capacity and sufficient inventory levels further contributed to market stability by mitigating short-term supply concerns. The EIA's Short-Term Energy Outlook (STEO) provided quarterly fuel price projections for 2024 and 2025, reflecting a stable market outlook with values ranging from USD 3.84 to USD 4.08 per gallon.

On the other hand, Brazil experienced a decline in Diesel demand during March 2024, influenced by seasonal fluctuations and potential economic slowdown. Petrobras' decision to reduce Diesel prices and the mandated increase in biodiesel blending from 12% to 14% further dampened the demand for pure fossil Diesel. Additionally, global fluctuations in crude oil prices and governmental efforts to stabilize prices played pivotal roles in shaping the domestic market. Despite a significant surplus of 3.2 million barrels of Russian Diesel, Brazil continued to receive shipments without a complete halt.

The approval of the Fuels of the Future proposal by the Brazilian Chamber of Deputies, advocating for a gradual increase in biodiesel blending to 20% by 2030, showcased the country's proactive stance in shaping its industry. Moreover, Brazil diversified its Diesel sources by importing about 0.7 million tons from nations such as Algeria, Kuwait, the Netherlands, and the US. The retail prices of Diesel in Brazil witnessed a notable decline in March 2024, reaching a high of USD 1.26 per liter due to surging global crude oil prices, reflecting the market's sensitivity to external factors.

As per ChemAnalyst, the US Diesel market is poised to maintain its stability, with moderate supply and demand dynamics expected to persist. In contrast, Brazil may see a resurgence in demand as the Fuels of the Future proposal moves forward, potentially driving prices upward. However, uncertainties remain regarding global crude oil prices and geopolitical tensions, which could influence Diesel prices in both regions in the coming months. Overall, while the US Diesel market remains steady, Brazil's market is experiencing shifts that could impact its trajectory soon.