The U.S. Energy Information Administration raised its 2027 retail diesel price forecast by 8.2% on Wednesday, citing falling domestic inventories driven by tight global distillate supplies. In its September Short-Term Energy Outlook, the EIA projected retail diesel will average $4.40 a gallon in 2027, a 33-cent increase from its prior forecast of $4.07, and also raised its 2026 forecast by 4.4%, to $5.07 a gallon from $4.85. The agency said U.S. distillate fuel oil inventories, of which diesel is a major product, are expected to fall below 100 million barrels in September, a level not seen since 2003, and remain below the five-year 2021 to 2025 low through much of 2027, with supply losses from the Middle East, Russia and China plus high U.S. net exports driving the decline. The EIA warned the inventory crunch could be especially severe this fall and winter as seasonal refinery turnarounds cut distillate output while farms and cold-weather households ramp up consumption, potentially lifting heating oil costs across the Northeast. In its broader outlook, the agency estimated Middle East crude production shut-ins averaged 6.7 million barrels per day in August, up from 5.0 million in July, and forecast Brent crude to average around $90 a barrel in the second half of 2026 before declining to an average of $74 a barrel in 2027.
EIA raised its diesel/heating oil price forecasts on falling distillate inventories and tight global distillate supply, with a severe fall/winter crunch expected.
EIA cites Middle East crude production shut-ins averaging 6.7 million bpd in August, tightening global crude supply and supporting Brent.
