U.S. Diesel Prices Slide in November, China's Refining Cuts Set to Tighten Supply

Diesel prices in the United States continued their downward trend, reflecting a broader stabilization across most regions during early weeks of November. According to the U.S. Energy Information Administration (EIA), the average on-highway Diesel price remained relatively unchanged from the previous week, with only marginal fluctuations observed across different areas. Prices in areas such as the East Coast, Midwest, and Rocky Mountains showed a minimal disparity since July, indicating a steady market. Despite the generally consistent decline, this week’s drop was slower, with the national average decreasing by just one cent.

The price shifts were relatively modest, with the Central Atlantic region seeing a slight uptick, while other regions, including the West Coast, East Coast, Midwest, and Gulf Coast, all experienced small price reductions. Notably, the Gulf Coast continued to maintain its position as the region with the lowest Diesel prices, while California remained the most expensive. The market dynamics were largely influenced by inventory adjustments, as suppliers and distributors aimed to reduce stock levels ahead of the year-end. Seasonal factors and a mild economic slowdown further contributed to the weakening demand, keeping prices subdued.

Refiners in the U.S. also faced challenges as margins for both gasoline and Diesel remained relatively flat. This was largely attributed to the slowdown in demand growth, which had begun after the post-pandemic surge in 2021 and 2022. With two major U.S. refineries scheduled for closure next year, refining capacity was expected to dip, reducing supply and potentially putting some upward pressure on prices. However, overall refiner margins were expected to remain stable in the short term. Despite these challenges, higher demand for Diesel in the U.S. was forecast to provide some relief for refiners, with fuel consumption expected to hold steady or increase slightly in the coming year.

Meanwhile, in China, Diesel market conditions diverged from those in the U.S. Amid a broader economic slowdown, China's refining output faced a reduction as refiners struggled with weak demand for transport fuels and a growing shift towards alternative energy sources, such as electric vehicles and liquefied natural gas for trucks. Diesel consumption in China had already been impacted by slower domestic fuel sales, and with refining margins under pressure, key players like Sinopec and PetroChina reported declines in profit and oil processing activities. This drop in output was expected to tighten fuel supply, potentially supporting Diesel prices in the short term. However, China's overall refining capacity was still among the highest in the world, and the forecasted reductions were relatively modest, suggesting limited long-term impact on global supply.

The outlook for Diesel markets in the U.S. and China reflects contrasting dynamics. In the U.S., Diesel prices are anticipated to remain stable, with minor fluctuations driven by seasonal demand and inventory adjustments, while refiners may experience slight benefits from marginally higher demand in 2025, despite constrained margins and limited capacity growth. In China, the outlook remains more uncertain due to reduced refining throughput and subdued demand growth, which could hinder a significant price rebound. However, ongoing cuts to refining output could tighten supply and provide some support for prices. The prospect of Donald Trump returning to the White House adds further uncertainty to the U.S. Diesel market, especially regarding possible changes to oil production policies. Overall, both markets face short-term challenges, with refining capacity and demand trends expected to play pivotal roles in shaping global Diesel prices through 2025.