US diesel price hits record nominal high as global distillate supply stays tight

US retail diesel prices climbed to a record nominal high of USD 6.29 per gallon last week, as tight global distillate supplies and elevated crude oil prices kept upward pressure on the fuel, the US Energy Information Administration (EIA) said.

The average, recorded for the week ended September 14 in the agency's weekly gasoline and diesel fuel update, is the highest in nominal terms since the series began in 1994. Adjusted for inflation, it is the steepest reading since 2022.

Diesel prices are shaped by a mix of factors, including crude oil costs, refining margins or crack spreads, retail margins, distribution expenses and taxes. In recent months, constrained global distillate availability and firm crude prices have combined to push pump prices higher.

US distillate production averaged 5.1 million barrels per day between January and August, the strongest showing since 2019. Refineries have been running close to their limits, with utilisation touching 97 per cent in the week ended September 11.

Even so, inventories have barely moved through the summer, a period when stocks typically build. In the week ended September 11, US distillate inventories stood 15.8 million barrels, or 13 per cent, below the five-year seasonal average for 2021–2025. The lean stock position has lifted refining margins.

The EIA expects global distillate fuel production to stay under last year's levels in the months ahead, a trend it said would keep net exports high, inventories low and prices elevated.

Wider diesel crack spreads, alongside costly crude, have fed through to retail prices. Because diesel powers road and rail freight, sustained high prices can raise transport costs for goods across the board. The fuel also has significant seasonal demand in agriculture and in home heating across the northeastern United States.