AAA Daily Fuel Gauge Report for Friday, 10/27/2017

When the price of diesel goes up, the cost of everything else follows. Peak travel season is upon us and gasoline prices continue to soar. Americans are rightfully concerned as the cost of filling up their tank keeps going up at the pump. And while most may not pay as much thought to the price of diesel, the reality is that number weighs even heavier on their pocketbooks. Virtually every good you can think of travels by truck before it’s in your reach. And today’s trucks, by and large, run on diesel. The price of diesel is baked into the price of everything else, gasoline included. Right now, motor carriers are getting slammed by nightmarish surges in the price of diesel. It’s especially hard on smaller fleets, which don’t operate at a scale to negotiate rates down or lock prices into a contract. These small businesses account for 97% of trucking companies in the U.S., running 20 trucks or fewer.

American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 5.1% in July after surging 8.9% in June. In July, the index equaled 109.6 (2015=100) compared with 115.5 in June. Despite July’s decline, the index was 3.3% above the recent low in May. June’s increase was revised up slightly to 8.9% from our July 21 press release. Compared with July 2019, the SA index contracted 8.3%, the fourth straight year-over-year decline. Year-to-date, compared with the same period in 2019, tonnage is down 3.2%.

The market “looks a lot more bullish than it did three or four months ago,” said James Williams, president of London, Arkansas-based energy researcher WTRG Economics. The stockpile declines aren’t surprising since “refinery utilization is coming down this time of year because it’s turnaround season,” he said. Nonetheless, he predicted prices will rally again Wednesday if the government confirms the drops. The Organization of Petroleum Exporting Countries is expected to extend supply cuts beyond their March expiration date, which has supported oil above the key $50-a-barrel psychological threshold. In addition, oil demand is proving more resilient than some expected, Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih said in Riyadh. Stockpiles at Cushing, Oklahoma, the delivery point for New York-traded futures contracts, probably declined by 500,000 barrels, according to a separate forecast compiled by Bloomberg. A Bloomberg survey estimated that U.S crude stockpiles slid by 3 million barrels last week, while gasoline stockpiles probably rose by 1.7 million barrels. The API report also showed crude stockpiles rose by 519,000 barrels, while Cushing supplies fell by 55,000 barrels last week. A draw at Cushing would be the first since August if the Energy Information Administration confirms it in its data release on Wednesday. Click Read More below for additional information.