Those who traveled during the Labor Day weekend probably noticed the low price of fuel. In fact the national average price of gasoline was $2.24, more than $0.25 lower than last year. While diesel prices have increased $0.10 in the last few weeks they are still lower than the five year average. Analysts say low crude oil prices are the main factor and don’t see prices increasing anytime soon.
“I don’t think the market is going anywhere,” says Peter Meyer of PIRA Energy. “We’ll trade down to $40 [per barrel of crude oil] and maybe we’ll trade up to $55 but I don’t see that $25 number coming.”
It’s common for farmers to look at locking in fuel for next year during the fall. Meyer advises farmers to hold off for now.
“I wouldn’t be in any rush to hedge any diesel use for next year,” he says. “We are supportive of the [current] price but we also think there are some limiting factors on top, because as soon as you get above $55 we would expect U.S. production to pick up.”
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