Diesel Fuel Prices Going Higher As Crude Goes North

Light, sweet crude for January delivery recently traded 50 cents, or 0.6%, higher at $88.50 a barrel on the New York Mercantile Exchange, nearing fresh two-year highs. Brent crude on the ICE futures exchange recently traded 55 cents higher at $91.24 a barrel, after hitting its highest price since October 2008. It’s going to be hard to find fuel saving when diesel fuel prices catch up to the price of crude. Nonfarm payrolls rose by 39,000 in November as private-sector employers added just 50,000 jobs, the Labor Department said Friday, well below economists’ average estimates calling for a 144,000 increase. A separate survey showed the unemployment rate unexpectedly rose to 9.8% last month.

The reports suggested there remained underlying weakness in the economy, but oil’s declines were muted following the closely-watched data.”Certainly you want to see employment trends increasing because that should contribute to gasoline use rising…and the demand for petroleum ought to increase,” said Andy Lebow, an oil analyst with MF Global. “But the market is actually performing pretty well here, given that number.”

Despite Friday’s report, economic data in the U.S. has been improving, and demand in China, the world’s second-largest crude consumer, isn’t expected to fall despite the government’s efforts to slow the economy. China is the 1,000 pound grillia in the room. They will determine where diesel fuel prices go as they continue to grow. They are fueling the demand that will give fleet companies fits as diesel fuel prices go higher during 2011.

Meanwhile, supply and demand fundamentals in the oil market have improved. U.S. inventories peaked at 27-year highs in September, and have mostly fallen over the past two months. With falling inventories and increased demand, diesel fuel prices will continue to go up. You need to get your fuel management filled with controls as part of your fleet management solutions. That means fuel cards, fleet credit card services, fleet cards and you can’t expect your fleet manager to be able to handle all of these extra fleet management duties by himself. He might be able to try but your fuel management program for controlling diesel fuel prices, diesel fuel additives, mobile fueling, fleet fueling, fuel cards it is too much for one person to handle properly if you want a good fuel management solution.

“We’ve spent two years where the market has ignored current fundamentals and focused on future fundamentals. But what we’ve seen is that the inventory levels, in the U.S. and globally, are starting to destock,” said Dominick Chirichella, an oil analyst at the Energy Management Institute. “We still have plenty of supplies, but it is certainly moving towards a more normal direction.”

Brent crude, a benchmark widely used in Europe and Asia, has risen to two-year highs. Brent futures have switched to a backwardated price structure–where near-term futures contracts are more expensive than contracts further into the future–which is a sign that fundamentals are improving.Nymex crude has also rallied near two-year highs on the back of a weakening dollar.

The euro has risen more than 3 cents against the dollar this week after worries subsided about Europe’s sovereign debt crisis. The European Central Bank on Thursday said it abandoned its plan to wind down emergency support for banks and government debt markets. As we know, everything effects diesel fuel prices, so when you see anything expect that diesel fuel prices will have a reaction to it. Do your company a favor, invest a small amount of time and call us, our fuel mangement staff will help make sure that your fleet companies operation is getting the right price from fuel companies. The will review and do fuel audits as part of our fleet managment services and ensure your fuel cards are getting you the fuel savings that you want to achieve. With diesel fuel prices going higher, achieving fuel saving will only get more difficult so you want your fleet companies decision with fuel managment, fleet management, fleet fueling professionals. www.SokolisGroup.com saves fleet companies more fuel savings than anywhere else.

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