Oil, gas, and diesel prices are declining — but not all for the same reason

Consumers may see a reprieve from high energy prices this month. The price of West Texas Intermediate is $86. Gasoline is below $4 nationally, and diesel prices are also ticking down.

And yet these three products are all facing slightly different market conditions.

Crude oil is the central ingredient used to make diesel and gasoline, but it has its own market. And despite the Iran war, that market is finding ways to get closer to normal, bringing prices down, according to Gregory Brew, a senior analyst with Eurasia Group's Energy, Climate & Resources team.

“The oil market right now is pretty well-supplied,” Brew said. “The U.S. has had success getting oil out of the Strait of Hormuz over the last two months.”

The election of Democrats to Congress last week also lowered the oil risk premium.

“The oil market has broadly viewed the U.S. midterm election result as constraining Trump, reducing his ability to escalate the conflict against Iran,” Brew said.

But diesel is a different story.

“It really has nothing to do with the midterms,” said Tom Kloza, an energy advisor for Gulf Oil.

Kloza said that he has seen diesel prices tick down, despite all the refinery shutdowns in Russia constraining supply.

“Here's what happens in November: demand isn't really terrific because it's after the agricultural season, and it's too early for the real winter demand, and supply tends to build,” he said.

But it could take a while for a meaningful and sustained drop in diesel prices to materialize, since it will take many months to restore the lost refining capacity from attacks in Russia and the Middle East, according to Debnil Chowdhury, who leads North and Latin American Refining and Marketing research at S&P Global Energy.

“We don't expect the damage to be repaired in a meaningful way until next year,” Chowdhury said. “And then … we're kind of estimating that we don't reach pre-war run levels until some point in 2028.”

And as far as gasoline, seasonality is also playing a role in the drop in prices at the pump.

“We're entering the part of the year where seasonal demand declines significantly because we're not in the summer months anymore,” Chowdhury said. “It's a little bit easier to produce winter-grade gasoline versus summer-grade gasoline.”

Consumers may catch a break this November, though the wars that are driving up energy prices aren’t over.