Been watching the diesel price situation pretty closely over the last few weeks, and there's definitely something shifting in the market right now. After two solid months of steady declines, we're finally seeing prices bounce back. The DOE/EIA benchmark just hit $3.53 per gallon this week—up 7.1 cents from where we were—and honestly, it's the first real uptick since mid-November.

What caught my attention is the timing. ULSD futures on CME have been climbing for about two weeks now, and the moves got pretty aggressive this week. Prices jumped over 10 cents on Tuesday alone, closing around $2.34 per gallon, which is the highest we've seen since early December. By Wednesday morning, things kept moving higher—we were looking at $2.42 per gallon, up another 8 cents. The diesel price momentum seems to be building here.

The main driver? Kazakhstan's production issues are a bigger deal than people initially thought. They've had to shut down operations at Tengiz and Korolev due to power problems, and that disruption is expected to last another week or two. On top of that, their December output already dropped to around 1.52 million barrels per day from 1.75 in November, mostly because of tanker delays. Even small supply hiccups in OPEC+ countries tend to ripple through the market pretty quickly.

There's also some broader geopolitical noise—Iran supply concerns, Greenland-related uncertainties—that's adding to the upward pressure. Brent crude bounced from its lows around $60 per barrel back up to the mid-$60s range this week. The interesting part is that the IEA's latest report still projects supply outpacing demand through 2026, so you'd think prices would stay under pressure. But short-term supply shocks tend to override longer-term fundamentals, at least temporarily.

The IEA is now forecasting global demand growth of 930,000 barrels per day this year and supply increases of 3 million barrels per day in 2025, with another 2.5 million expected in 2026. If those numbers hold, we'd have a massive supply surplus—over 3.5 million barrels per day imbalance across the two years. That's supposed to show up in inventory builds rather than price spikes, but for now, the diesel price action and broader crude moves suggest traders are more focused on the near-term supply disruptions than the longer-term glut story.