Winnipeg, Man. – The spring thaw may bring lower diesel prices to farmers in North America, according to a New Jersey based oil expert.
“A lot of new refining, world-wide, is coming on for diesel,” said Tom Kloza, chief oil analyst at the Oil Price Information Service.
He says diesel is the most likely fuel (compared to jet-fuel or gasoline) to drop during the next two quarters (April to September). Kloza says that’s because the main season for diesel is over as much of it is used for the winter heating market.
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Surges can sometimes happen with spring planting or the summer transportation season, but Kloza notes the next spike doesn’t usually take place until the autumn harvest. Diesel is the fuel most commonly used by agricultural machinery.
He adds there is a tremendous difference between the prices motorists see at truck-stops and the prices big fleets can command.
“The big fleets tend to buy at a negotiated price, they’re already seeing savings that are much lower than what you might think when you look at retail street prices,” said Kloza.
Although he says the possibility of a major event in the Middle East always raises the spectre of higher prices, he suggests producers will see diesel prices that are reminiscent of the spring of 2009.
Kloza says crude oil could temporarily creep below US$40 a barrel in the near future but wouldn’t linger there for very long. He noted that would eventually have a downward effect on diesel. The price of a barrel of oil was US$47.81 as of April 1.
“There aren’t many real good kinds of catalysts to drive diesel prices higher in the spring,” he added, noting spring planting tends to be smoother than it used to be and not nearly as diesel-intensive.
Reported diesel prices across the Prairies generally ranged between 89.9 cents per litre in Calgary to 96.9 cents in Regina to 93.4 cents in Winnipeg as of April 1.
