Diesel demand in the United States has been falling in recent months, also reflected in declining wholesale and retail diesel prices, pointing to a slowdown in industrial and freight activities and intensifying fears of a recession in the world’s largest economy.Major U.S. transportation and logistics companies missed Wall Street forecasts in their Q1 earnings and flagged a “freight recession” last week.“To start, we’re in a challenging freight environment where there is deflationary price pressure for an industry that continues to face inflationary cost pressures. Simply stated, we’re in a freight recession,” J.B. Hunt president Shelley Simpson said on the earnings call last week.Lower trucking activity and slowing U.S. economic growth, which was 1.1% in the first quarter, down from 2.6% in Q4 2022, don’t bode well for domestic diesel demand, analysts say.“If you were looking at it in the closet, and not knowing what the wider economy was doing, you would say we’re seeing some sort of an industrial recession,” Tom Kloza, global head of energy analysis at the Oil Price Information Service (OPIS), told the Financial Times.The benchmark diesel futures for fuel delivered into New York Harbor slumped last week to a 15-month low as the fears of a diesel shortage from last autumn have now turned into fears of weak diesel demand due to a flailing economy.Retail prices for diesel have also been falling for most of this year.The national average price of diesel has fallen by 5.3 cents in the last week and stands at $4.07 per gallon, $1.18 lower than at this time last year, Patrick De Haan, head of petroleum analysis at GasBuddy, said on Monday.“Diesel prices have followed, falling to their lowest in over 13 months as demand remains weak due to concerns over the economy,” De Haan noted.By Tsvetana Paraskova for Oilprice.com

Source: www.baystreet.ca