Diesel Fuel Prices Update: What Did the EIA Forecast?

Reduced diesel prices are bearish for refiners such as Phillips 66 Company (PSX), Hacienda Corporation (TSO), Valero Power Corporation (VLO), and Race Petroleum Corporation (MPC). Because discussed in the previous part of this particular series, crude oil byproduct prices are influenced through crude oil prices, diesel powered stocks, and refiners’ working or operational capacity.

Tesoro and Convention Petroleum combined make up second . 4% of the iShares Dow Jones US Energy Field ETF (IYE). Valero Vitality (VLO) accounts for 2 . 4% of the Vanguard Energy ETF (VDE), and Tesoro makes up about 3. 2% of the Electricity Select Sector SPDR ETF (XLE).

Lower diesel costs can result in low production amounts, which is negative for MLPs such as Valero Energy Spouses (VLP), Phillips 66 Companions (PSXP), and MPLX (MPLX). Low production volumes is effective in reducing the revenue of transportation operators.

Key drivers associated with diesel prices include periodic fluctuation in diesel need, decreased margins for refiners due to low crack distribute, and decreased diesel usage in China. More with regard to diesel from European countries may be the only driver that could increase diesel prices in the future.

EIA forecasts

The EIA predictions that consumption of distillate energy, which includes diesel fuel as well as heating oil, will drop by 0. 7% in order to 30, 000 bpd (barrels per day) in 2015 and then increase by one 3% to 50, 000 bpd in 2016. The actual 2016 growth would be primarily due to an increase in exports and also manufacturing output. The average store diesel price was $3. 83 per gallon within 2014. This is projected to be able to fall to an average regarding $2. 72 per one gallon in 2015, and then increase to $2. 77 for each gallon in 2016 because of consumption levels.

www.yuchaiie.com