The benchmark diesel price used as the basis for most fuel surcharges inched up this week, the fourth consecutive week of increases, in the midst of an oil market that still is pushing higher.

The average weekly retail diesel price published by the Department of Energy/Energy Information Administration rose 0.7 cents/gallon effective Monday, published Tuesday, to $3.688/g, up 0.7 cts/g.

It is the smallest gain in the ongoing four-week climb that has taken the price up from $3.459/g on January 12 to the latest number. That January 12 price was the lowest since June.

With the usual lag between the price of ultra low sulfur diesel (ULSD) on the CME commodity exchange and the price at the pump, it’s uncertain where retail markets might be headed next.

Calendar impacting prices

The price of ULSD on the CME commodity exchange is significantly lower now than it was two weeks ago, but that has little to do with the overall market and everything to do with the calendar.

Two weeks ago, and through trading on January 30, the front month ULSD contract traded on CME was for barrels delivered into New York harbor in February. On February 2, the front month became March as February expired.

Given that March is generally warmer than February; that ULSD and heating oil are structurally similar; and that markets two weeks ago were reacting to a deep freeze affecting heating oil demand, ULSD on CME closed out the month with a January settlement of $2.7356/gallon, the highest since April 2024.

But by Monday, the settlement for March barrels was down to $2.3598/g, as markets then were reacting to reports of possible progress in U.S.-Iran relations as well as the rollover in the contract.

Up and down trading in the days that followed brought the ULSD settlement as high as $2.47/g on Wednesday, before easing to settle Monday at $2.4169/g.

Crude benchmark is rising

Even as that was going on in ULSD, the market for global crude benchmark Brent has been steadily moving higher. After a settlement Monday of $69.04/barrel, it has increased by $8.19/b from the December 31 settlement of $60.85.

This was going to be the year of the oil glut, according to major forecasting agencies like the International Energy Agency. They looked at the OPEC and OPEC+ nations having unwound much of their earlier reductions in output, then saw demand increases that were modest at best, three in higher output from a list of countries that included Guyana, Brazil, Canada and the U.S., and the conclusion was that significantly lower prices were on tap.

Where’s the glut?

But almost six weeks into the year of the forecast great glut, that is not occurring. The latest developments in oil prices have undercut that narrative.

That fact was the subject of an eye-opening interview oil analyst Jeffrey Currie, long-time chief of commodities research at Goldman Sachs and now Chief Strategy Officer of Energy Pathways at The Carlyle Group, gave to Bloomberg TV Monday.

“I like to say, show me the glut.” Currie said “They’ve been telling this oil supply glut story for 18 months now, and it still has not materialized.”

Currie’s interview was notable because he took a longer-term view of commodity markets, including but not limited to oil. His core argument was that while some supply/demand balance forecasts are showing an excess of supply, investment in production capacity is not keeping up with what is likely to be a rush of demand related in part to data centers and AI.

“We’ve got hundreds of billions of dollars going into data centers that are going to consume power,” Currie said. “How you produce that power is with commodities. You need the copper to produce the grid, the transformers. You need natural gas to produce the power in the United States. And then you need other natural resources elsewhere in the world.”

Currie noted that the “new economy” of software can rapidly scale up to meet demand. But the “old economy” that needs to generate the commodities to build and power data centers can not.

“You have these hyper scalers that are used to being asset light that are now doing asset heavy businesses that get you a lower multiple,” Currie said. “They are running into supply constraints. So we have to take capital out of that sector and start investing in asset-heavy industries and commodities.”

But Currie added that sector has not seen significant levels of investment for many years. He added that the surge of oil supply that has been coming out of those non-OPEC countries previously mentioned, like Brazil, is likely to see 2026 as its last year for awhile of significant growth, based on investment numbers.

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