Fuel cost instability causing market confusion, uncertainty

Wildly fluctuating fuel prices are causing confusion in the petroleum market. Yesterday, officials witnessed an unanticipated plunge in Platts heating fuel prices for the Mediterranean, down by 120 euros per ton, a reduction resulting in a retail price of 1.45 euros per liter for households in Greece, well under Monday’s forecasts that had projected price levels in excess of 1.55 euros per liter.

Market officials have not attributed this sharp price drop for heating fuel to supply and demand factors. With winter trading for this fuel set to begin on October 14, market uncertainty is high.

Meanwhile, diesel prices are moving in the opposite direction, continuing along their upward trajectory. Quite extraordinarily, the cost of diesel now steadily exceeds that of gasoline, despite traditionally being far cheaper.

This unusual trend has been attributed to an increase in demand for diesel amid the energy crisis. An increasing number of industrial consumers in Greece and other parts of Europe are turning to diesel as an alternative to natural gas in an effort to save on energy costs.

Contrary to diesel, demand for gasoline in Greece has fallen, dropping 15 percent, according to market officials, as a result of less vehicle usage. The end of the summer tourism season has also contributed to this decline.