Drop in diesel demand may indicate future recession risk

It’s not all doom and gloom. Europe’s demand for ultra-low-sulfur diesel is set to rise almost 9% between March and July, supported by summer travel, according to Janiv Shah, a senior analyst at Rystad Energy. 

Demand for the heavy-machinery fuel is weakening in many of the world’s largest economies.

In China, the number of trucks running on highways is noticeably down in recent weeks. In Europe, diesel’s premium to crude futures recently plunged to the lowest level in more than a year.

In the US, demand is on track to contract 2% in 2023, S&P Global says. Excluding 2020, when much of the economy briefly came to a standstill, that 2% slump would be the biggest drop in America’s diesel use since 2016.