CNS Canada — The spring thaw may bring lower diesel prices to farmers in North America, according to a New Jersey-based oil expert.
“A lot of new refining, worldwide, is coming on for diesel,” said Tom Kloza, chief oil analyst at the Oil Price Information Service.
Compared to other fuels such as gasoline or jet fuel, diesel is the most likely to drop during the next two quarters (April to September), he said, because the main season for diesel is over, as much of it is used for the winter heating market.
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Surges can sometimes happen with spring seeding or the summer transportation season, but Kloza noted the next spike doesn’t usually take place until the autumn harvest.
There is a tremendous difference, he added, between the prices motorists see at truck stops and the prices big fleets can command.
“The big fleets tend to buy at a negotiated price; they’re already seeing savings that are much lower than what you might think when you look at retail street prices,” said Kloza.
Although he said the possibility of a major event in the Middle East always raises the spectre of higher prices, he suggested producers will see diesel prices reminiscent of the spring of 2009.
Crude oil could temporarily creep “have-a-cup-of-coffee” below US$40 a barrel in the near future, but wouldn’t linger there for very long, Kloza said. He noted that would eventually have a downward effect on diesel.
The price of a barrel of oil, as of Wednesday, was US$47.81.
“There aren’t many real good kinds of catalysts to drive diesel prices higher in the spring,” he added, noting spring seeding tends to be smoother than it used to be and not nearly as diesel-intensive.
Reported per-litre diesel prices across the Prairies, on average, ranged Wednesday from 89.9 cents in Calgary to 93.4 cents in Winnipeg and and 96.9 cents in Regina.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
