Motor carriers can anticipate a more stable and cost-effective journey at diesel pumps throughout 2024, according to industry experts. This projection follows a trend observed in 2023 when fuel prices, after a period of uncertainty, showed signs of stabilization.
“I would hope 2024 will be a gentler year for diesel,” said Patrick De Haan, GasBuddy head of petroleum analysis.
The U.S. on-highway retail diesel price average commenced the year at $3.876 per gallon, a noticeable decrease from the 2023 starting price of $4.583 per gallon. Last year witnessed fluctuations in the national average, hitting a low of $3.794 in July and a high of $4.633 in September.
American Trucking Associations Chief Economist, Bob Costello, predicts minimal movement in diesel prices this year, drawing parallels to December 2023 when the national on-highway average consistently remained around or below the $4-per-gallon mark.
In 2023, industry observers closely monitored the actions of the Federal Reserve and OPEC oil ministers. However, analysts suggest that OPEC faces a more challenging task in 2024 as its members strive to balance revenue needs for their oil-dependent economies through output cuts while retaining market share amid record U.S. crude production.
Wood Mackenzie, a business intelligence firm, anticipates the average benchmark Brent crude to be $88 per barrel in 2024, compared to $83 per barrel in 2023. West Texas Intermediate crude is expected to average $83 per barrel, up from $78 per barrel in 2023, according to Vice President of Refining, Chemicals & Oil Markets Alan Gelder.
Bank of America’s Francisco Blanch forecasts Brent and WTI prices to average $90 per barrel and $86 per barrel, respectively, as the OPEC+ alliance pledges an additional 500,000 barrels per day of production cuts.
While Brent’s 2023 low was $71.84 a barrel in June, peaking at $96.55 per barrel in late September, industry experts remain optimistic. Despite fluctuations, analysts project a balanced market in the first half of 2024, with ING forecasting a small surplus in the second quarter.
BOA’s Blanch notes that global oil demand grew by 2.1 million barrels per day year-over-year in 2023, and it is expected to grow by 1.1 million barrels per day in 2024, benefiting from the conclusion of the U.S. monetary tightening cycle and increased supply in non-OPEC+ nations.
As a result, OPEC’s production cuts are expected to be reversed, and with rising oil demand, global diesel production is poised to increase in the coming year. This positive outlook indicates a more predictable and potentially more affordable fuel landscape for motor carriers in 2024.
Source: Transport Topics
