The US Energy Information Administration (EIA) today raised its 2026-2027 retail diesel price forecasts by 4.4pc and 8.2pc, respectively, as low inventories and high global demand continue to boost prices.
US diesel prices should average $5.07/USG this year compared with $4.85/USG in the previous forecast, the agency said in its monthly Short Term Energy Outlook. The 2027 diesel price should average $4.40/USG, up from $4.07/USG in the previous forecast.
The agency also increased its 2026-2027 estimates for retail gasoline prices, but the increases were not as steep, reflecting that the global diesel market is significantly tighter than the gasoline market.
US gasoline prices will average $3.84/USG this year and $3.35/USG in 2027, up by 1.5pc and 1.8pc from the previous forecasts, the EIA said.
US fuel prices, especially distillates, have soared since late February because of global supply shortages caused by the US-Iran war as well as Ukraine's drone campaign against Russian refineries.
US retail diesel prices averaged a record high of $5.967/USG in the week ended 7 September, up by $2.26/USG from the week ending 23 February, before the US and Israel began their strikes on Iran, according to the latest EIA data. US gasoline prices increased by $1.22/USG to $4.157/USG over the same period.
Major US refiners said in second quarter earnings calls that the tight product market should last into next year and possibly further, even if the US-Iran conflict is resolved, because of infrastructure damage and low inventories.
The EIA said Wednesday that it expects US distillate fuel oil inventories to drop below 100mn bl this month and remain below the five-year low through most of 2027.
Tightness in the global distillate market has raised domestic prices and incentivized higher US distillate exports, the EIA said.
Meanwhile, global production of distillate fuel will remain below last year's levels in the coming months, contributing to low US diesel inventories and high prices. The effect will be particularly pronounced because of seasonal drops in distillate production and seasonal increases in distillate consumption during the fall and winter, the EIA said.
Distillate production typically decreases during fall refinery maintenance season while harvest-season agricultural demand for distillate increases. Low inventories may also contribute to higher prices for residential heating oil in the northeastern US, the EIA said. The agency will release its annual Winter Fuels Outlook next month.
Some US refiners have postponed planned maintenance projects to 2027 to take advantage of current high fuel prices. US refiners have been maximizing diesel production and running plants at extremely high capacity, hitting 98pc utilization in the week ended 28 August, according to EIA estimates. It marked the highest utilization rate since 2018.
