Diesel Shortage Update Ahead of Thanksgiving as U.S. Waits on Supply Ships

The diesel shortage which raised concerns among analysts over a possible slowdown of the United States economy this winter is now slightly improving, right on time for the country to face one of its costliest holiday: Thanksgiving.

"We continue to see imports arriving into the mid-Atlantic and Northeast, about 623,000 barrels of distillate arrived last week, which was below recent levels. However, supply in the region is slowly building for now," Patrick De Haan, GasBuddy's head of Petroleum Analysis told Newsweek.

"Diesel prices are falling gently across the country, to a modest degree, a trend that will likely continue into Thanksgiving and potentially beyond it as well. Cold weather could turn around the recovery, however, so keep an eye on temperatures."

Diesel reached a record-high average price of $5.703 a gallon in June this year, as low inventory, increased demand after the pandemic lull, reduced capacity at U.S. refineries and a ban on Russian energy imports combined to the current supply crunch. Even though prices have since dropped, they have remained in the range of over $5 per gallon.

Average diesel prices across the U.S. have slightly dropped in the week ending on November 21, following a trend that saw the average cost of diesel marginally but steadily decline across the state in the past three weeks.

Compared to the previous seven days, the average diesel price was $5.233 per gallon as of Monday, compared to $5.313 per gallon as of November 14 and $5.333 per gallon as of November 7.

But though the data offer a slightly positive outlook on the ongoing diesel shortage which is hitting the East Coast the hardest, diesel prices remain $1.509 per gallon higher this last week than the same time a year ago.

Inventories have also slightly improved nationwide in recent weeks.

As of the week ending on November 11, the U.S. had 107.383 million barrels left in stock, the equivalent of 27.4 days of supply according to the Energy Information Administration (EIA). That means that, in the unlikely scenario in which all U.S. refineries across the country were to suddenly shut down, the country would have enough diesel to cover 27.4 days.

This number is slightly higher than the diesel stocks reported by the EIA in October when it said the U.S. had 25.4 days of supply left, the lowest level since 2008. But it's also a slight drop compared to the previous three weeks, which said the country had 28 and 28.1 days of distillate fuel in storage (which includes diesel).

Despite the low inventory and the incoming cold season, analysts think diesel prices are unlikely to continue growing.

"I'm not so sure we'll see prices rise much above where they are right now," said Denton Cinquegrana, chief oil analyst at the agency Oil Price Information Service (OPIS), told Newsweek.

"Market seems to be a bit calm for the time being. But that can change in the blink of an eye."

The holiday season is unlikely to make "a huge difference in demand" for diesel, said Cinquegrana, as "a lot of the big box retailers—Target has mentioned this a couple times—said they have abundant inventories," Cinquegrana said.