Market Update: Diesel and Crude Oil trends heading into winter

Kane Kuehl, Energy Sales Manager

Nov 12, 2025

Energy Markets

As we move deeper into the fourth quarter, the energy markets remain volatile yet opportunistic. Crude oil and diesel continue to dominate the conversation - and for good reason. Tight supply, refinery maintenance, and shifting global trade patterns are all contributing to sustained price strength. Here's what's driving today's market and what it means for your 2026 diesel contracting strategy. 

Crude Oil Overview

Crude oil prices have held near t he $60 per barrel mark as of early November, supported by a combination of tight inventories, refinery limitations, and geopolitical risk premiums. Data from November 5, 2025, shows:

  • WTI Crude (Dec '25): $60.25
  • Heating Oil (Dec '25): $2.51

The energy complex remains supported by several key factors. 

  • Global production adjustments: OPEC+ members have begun gradually restoring production, adding barrels back into the market after months of output restraint. While this increase provides some balance, it hasn't been enough to offset refinery bottlenecks or global demand growth.
  • Geopolitical Tensions: The recent Ukrainian drone strike on Russia's Black Sea port of Tuapse disrupted crude and refined product exports, removing an estimated 240,000 barrels per day of capacity.
  • Refinery Constraints: Scheduled maintenance and unplanned outages - including at several large US refineries - have limited total fuel output. Refining margins remain strong, reflecting robust demand for diesel and jet fuel. 

Domestically, the EIA reported a 5.2 million barrel rise in U.S. crude inventories, pushing total stocks to 421.2 million barrels. While that may sound bearish, the increase was offset by draws in gasoline and distillate inventories, confirming continued strong fuel consumption and tight refining capacity. In short, crude markets remain rangebound with a firm floor. The gradual OPEC+ supply additions are helping to stabilize global balances, but any unplanned refinery outages or renewed geopolitical flare-ups could quickly create upward price pressure. 

Diesel Market Dynamics 

Diesel continues to lead the energy complex, supported by seasonal demand, export strength, and tight inventories. U.S. distillate stocks currently sit at 111.5 million barrels, which is below the five-year average for this time of year. 

Three major forces are shaping diesel prices right now: 

  1. Refinery Production Mix: Refiners are prioritizing jet fuel and diesel output due to stronger margins, but maintenance season has cut overall production. Even small disruptions can ripple through supply chains.
  2. Global Export Demand: Europe remains a strong buyer of U.S. diesel as it continues to phase out Russian product imports. Additionally, developing markets in Asia and Latin America are drawing from U.S. Gulf Coast Inventories, tightening domestic availability.
  3. Seasonal and Industrial Demand: Harvest logistics, construction activity, and freight movement all contribute to solid diesel consumption in Q4. Even modest temperature drops increase heating oil demand in northern markets, adding another layer of support. 

The front-month for diesel prices remains elevated, reflecting near-term supply tightness and refinery constraints. However, the futures curve shows a clear backwardation over the next 12 months - meaning later contracts are priced lower than current values. This suggests the market expects supply conditions to gradually improve in 2026, though physical fundamentals remain firm in the near term. 

As a result, diesel prices are expected to remain firm through winter, though we may see short-term pullbacks tied to crude fluctuations or refinery restarts. 

Diesel Contracting Opportunities for 2026 

With current diesel prices elevated but relatively stable, now is the time to plan 2026 fuel contracts. Locking in a portion of next year's needs provides both cost certainty and flexibility. 

At Central Valley Ag, we recommend a layered purchasing strategy. 

  • Start small: Secure 25-50% of your estimated annual volume soon to establish a pricing foundation.
  • Stay alert: Watch for dips or technical corrections to add layers incrementally.
  • Avoid all-in pricing: Markets can shift rapidly, and spreading out purchases helps mitigate timing risks.

This approach is especially effective for our ag, construction, fleet and industrial customers, who face variable fuel usage tied to project schedules and weather. A layered plan allows you to take advantage of favorable markets while protecting against unexpected spikes. 

Our CVA energy team continuously monitors rack trends, refining margins, and global indicators and we'll notify customers when new buying opportunities arise. 

Final Thoughts 

Crude and diesel markets remain well-supported, with the potential for both volatility and opportunity heading into 2026. By combining strategic planning with disciplined layering, you can manage risk while positioning your operation for success in any price environment. 

If you'd like to review your diesel contracting options or set up a layering plan, reach out to our team anytime. We're here to help you make confident, informed fuel decisions. 

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