Winnipeg, March 22 – Diesel prices in Canada are expected to stay relatively cheap this spring despite some recent strength in the crude oil market.
In a normal cycle, diesel prices would usually be on the move right now but they have been mired at their current level for the last few months, according to Tom Kloza of the Oil Price Information Service’s office in New Jersey.
“The most common Canadian price has been stuck for awhile, it was stuck in the summer at a price that was too high. Now, across Canada we’ve got average prices of 91.6 (a litre),” he noted.
That’s roughly 10 cents cheaper than at the same point six months ago and 28 cents lower than a year ago, said Kloza.
While crude oil has posted significant gains in the past month, creeping above US$40 per barrel, Kloza says there is resistance just above that.
“At US$45 (per barrel) is the level at which shale gas wells can get restarted. So it’s a quagmire…and it’s going to have a tough time rallying through North America and indeed the world,” he said.
Subsequently the pricing forecast is “flat” and Kloza expects diesel to remain relatively cheap through the year.
“So they should be higher on Dec. 1 than March 22 but I don’t think you’re looking at a massive re-valuation,” said Kloza.
However, if a significant “event” happened in an oil-producing nation, natural disaster or otherwise, that could change the scenario.
