Diesel Price Falls After President Trump's Request for OPEC Action
Key Points:
* Retail diesel price declines for the first time in five weeks, following the first full week of the Trump administration.
* The average weekly diesel price drops by 5.6 cents/gallon to $3.659, reversing a previous increase of 11.3 cts/g.
* OPEC+ production levels, initially set to increase in January, have been postponed to April due to market sluggishness.
* Despite President Trump's demand for OPEC to lower oil prices at the World Economic Forum, the group maintains production quotas but does not set prices.
* Brent crude benchmark has fallen from $82.03/b on January 15 to $77.08/b on Monday, coinciding with Trump's request.
* The Biden administration's sanctions on Russian shipping have had a bullish impact on oil prices, but this effect is now being questioned.
* The spread between first and second month ULSD futures has widened, indicating tightening inventories.
* Kazakhstan has increased production from its Tengiz field, potentially impacting OPEC+ decisions on future production increases.
Additional Analysis:
* Trump's previous calls for lower oil prices have had an effect on markets in the past, but their influence may be diminishing.
* The decision to delay OPEC+ production increases until April was based on market conditions, rather than Trump's request.
* The rise in Brent prices in recent weeks has been attributed to additional sanctions on Russian shipping.
* The contango market structure in ULSD has shifted to backwardation, suggesting tightening inventories.
* Kazakhstan's production increase could influence OPEC+ decisions on ramping up output in April.