Diesel prices on the decline? Don’t count on it

WASHINGTON, D.C. (May 5) — The recent decline in the average price of diesel fuel may be coming to an end.

Initial estimates for April indicate that oil-producing countries appear to be living up to an agreement signed in March to cut production by 2 million barrels of crude oil a day — about 3% of world production. The OPEC nations, as well as some non-OPEC members, took the action after crude oil prices dropped to as low as $10 US a barrel.

Initial estimates for April indicate the countries involved cut back by about 1.4 million barrels, Ben Brockwell, editor of the Oil Price Information Service (OPIS), said in an interview with RoadSTAR Radio News.

“That’s pretty impressive, and indicates to most people who look at the market that there is a resolve to follow through on the agreement,” Brockwell said. “We expect that May is going to see even more cuts as they reach that 2 million figure.”

One important note is Venezuela, which in the past has been one of the biggest cheats when OPEC tried to limit production, has promised that they will abide by their production quotas and defend the price of crude to the $18-$19 dollar-per-barrel level.

Brockwell predicts these figures will send diesel prices back up. “Just in the last day or so, West Texas crude has again reached $19 a barrel,” he said, “and the market looks like it may be headed higher again.”

OPIS is projecting that diesel and gasoline prices will peak in the next four to six weeks — Brockwell said possibly by the end of May. After that, he believes prices will stabilize and go down the rest of the summer.

Brockwell noted that even though prices are higher than the ultra-low levels truckers were enjoying late last year and early this year, they will still be lower than most summers during the 1990s.