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As debate begins on Trump 47’s impact on oil, diesel benchmark hits 3-year low

Following a week of up-and-down futures prices – but with the “up” not lasting particularly long – the benchmark diesel price used for most fuel surcharges fell this week for the third time in four weeks to levels not seen in more than three years.

The Department of Energy/Energy Information Administration average retail price posted Tuesday fell 1.5 cents a gallon to $3.521. It is the lowest price since a $3.477-per-gallon price on Oct. 4, 2021. The most recent low had been $3.526 on Sept. 16.

The release of the price was delayed one day due to the Veterans Day observance.


There was no obvious movement in the price of ultra low sulfur diesel (ULSD) on the CME commodity exchange that could be tied directly to the reelection of Donald Trump. The price of ULSD did hit its recent high of $2.3042 a gallon on Tuesday and has moved lower since, settling Monday at $2.1976 before a small rebound Tuesday to $2.2108. But given that those prices are all in the range where ULSD has found itself recently, it’s difficult to make a correlation between recent futures price movement and the election.

One factor helping to push down prices that does have ties to the election is the strengthening U.S. dollar. Commodity prices, particularly oil, move in inverse correlation to the strength of the greenback.

On Tuesday, the dollar as measured by the DXY index, was up about 2.5% in five days of trading, which likely has helped push oil prices lower. A post-election slide in bond markets, which had the effect of pushing up interest rates, has been a factor in boosting the value of the dollar.

The question of whether a second Trump administration would result in a surge in U.S. production – and thereby a bearish downward push on prices – is finding few supporters among oil analysts and executives.


Among the most prominent skeptics of the suggestion that the U.S. is on the verge of an increase in oil production above its already current record levels of about 13.5 million barrels a day has been Darren Woods, the CEO of ExxonMobil.

In his latest comments – which echoed similar statements Woods made to the media since the election – the CEO tried to downplay any suggestion that the “drill, baby, drill” mantra was going to impact the oil major’s strategy.

“We don’t set our business plans based on the political agendas or who’s in the White House or what party is in control,” Woods told an interviewer from Bloomberg. “We look at the fundamentals and making sure that the investments we’re making are to our advantage versus the rest of the industry, and will be resilient in the bottom of the cycle. And then we make those plans and commit to that.”

ExxonMobil chief doesn’t see “constraints”

Woods conducted that interview at the COP climate meeting in Baku, Azerbaijan. He also said in prepared remarks at that event that government constraints on the U.S. oil industry have not been a factor.

“I don’t think U.S. production is constrained, so I don’t know that there’s an opportunity to unleash a lot of production in the near term, because most operators in the U.S. are already optimizing their production today,” he said, according to news reports from Baku.

A suggestion that the Trump administration would be bearish for oil prices came from the research team at Citi.

But its analysis was not that prices would be under pressure because of a flood of new production. Rather, Citi sees an economic slowdown created by tariffs that could depress demand, but with some supply factors mixed in as well.

“The second Trump term is likely to keep oil prices under pressure for 2025, reflecting trade tariffs, potentially more supply from OPEC+ and a supportive oil and gas agenda that could favorably impact the industry on the margin,” Citi wrote in a research note.


That “favorable” agenda could include changes in royalties from production on federal lands and other changes to leasing and production activities on those properties. The Citi note also mentioned “promoting tax incentives for capital investment in exploration and production.”

On the more immediate question of short-term and medium-term supply, the OPEC+ group was to begin increasing its output in December, a decision that was recently reversed. The group is scheduled to meet Dec. 1 to map out its strategy for 2025. OPEC+ consists of OPEC and a number of non-OPEC exporting nations nominally led by Russia.

Supply from OPEC+ was to be increased by 180,000 barrels a day, out of a 2.2 million-barrel-per-day increase the group implemented earlier this year.

Mixed demand outlook for 2025

OPEC+ faces a demand landscape that is seeing two of the leading agencies that forecast the supply/demand balance – OPEC itself and the International Energy Agency – at odds on what demand will do next year.

OPEC released its November report Tuesday. While it did trim back slightly its forecast for 2024, it still sees global demand rising 1.8 million barrels a day this year and 1.5 million in 2025.

The IEA’s November report comes out Thursday. In its October report, it forecast an increase in global demand next year of about 1 million barrels a day, one of the smallest increases in recent years. However, it would still be more than 2024, according to the IEA, which sees demand this year growing only by about 900,000 barrels per day.

The latest report from S&P Global Commodity Insights is that OPEC+ produced 40.26 million barrels per day in October. That is almost 1 million fewer than what it produced in January, 41.21 million.

While the reduction is nowhere near the 2.2 million barrels per day planned by the group, it is still a significant amount that has dropped every month this year except October, which was 30,000 barrels a day more than September. And yet despite those efforts, global crude oil benchmark Brent settled Tuesday at $71.89 a barrel. Brent averaged $79.20 in January.

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