Fuel market update - 16 June 2024

Oil and wholesale fuel prices are up materially this week, reversing the progressive declines seen over the last month. Driving the price movement, OPEC has come out strongly on long-term future oil demand in its most recent forecasts, while US economic and labour data adds weight to predictions of an interest rate cut this year.

International Diesel wholesale prices are up 4.5% for the week, and are now back over US$98 per barrel for the first time since mid-May. The Australian dollar also dropped 0.7% against the US dollar, and as a result we expect domestic commercial fuel prices will rise this coming week.

Australian fuel market:

• The international wholesale price for Diesel out of Singapore is now at over US$98 per barrel, up 4.5% vs. Friday last week. Jet Fuel is up 3.7%, and Gasoline up 0.7%;
• The Australian dollar decreased by 0.7% to US$0.6626;
• Shipping rates into Australia decreased this week by 3.4% and are approximately 3.7x ‘standard rates’.

International industry news:

• Oil prices ended the week up 3.8% to US$83 per barrel;
• Oil demand forecasts from the two major agencies of OPEC and the International Energy Agency (IEA) have been brought into stark comparison this week. The IEA has predicted peak oil demand to occur in 2029 at 106 million barrels per day, whereas OPEC outlined its bullish forecasts this week claiming peak oil demand of 116 million barrels per day will be reached in 2045 or later;
• The US Federal Reserve held interest rates steady at their most recent meeting, while their commentary reinforced expectations of a rate cut toward the end of this year. Supporting this assessment, the US Labor Department reported a 0.2% drop in the Producer Price Index (PPI) for May, while jobless claims reached 242,000 last week, the highest reading since August last year;
• Supply of Diesel into Europe has been tightening this week as escalating shipping costs out of the US Gulf Coast in particular has meant that it is more commercial for producers to send product into Asia. This trend is expected to continue for some time supported by strong Jet fuel demand in the region;
• Senegal has commenced oil production for the first time, with Woodside’s Sangomar project announcing its first oil.

As always, please contact your IOR account manager should you have any questions about the implications for your business. If you're not a customer yet, contact us at 1300 457 467 or [email protected] to find out what we can do to support your business.

IOR customers can access account details, transaction history and more, by logging onto the IOR portal at customer.ior.com.au.