Diesel Futures Surge to Near 2-Year High on Cold Weather, Refinery Disruptions

Ultra low sulfur diesel (ULSD) futures surged to their second-highest settlement since April 2024, reaching $2.6462/gallon on January 26, 2026, as extreme cold weather disrupted refinery operations and boosted heating oil demand. The DOE/EIA weekly retail diesel benchmark rose 9.4 cents to $3.624/gallon, marking a 16.5-cent increase over two weeks after eight consecutive declines. Cold-related operational issues affected refineries operated by INEOS, Pemex, Shell, LyondellBasell, ExxonMobil, and Phillips 66, reducing distillate output. The ULSD-Brent spread widened to $1.04/gallon, while the U.S.-Europe diesel premium hit ~40 cents/gallon, the widest in three years. Permian Basin production curtailments (est. up to 1.5M b/d) may further tighten supply. Next week’s DOE/EIA price is expected to rise further.