DIESEL: Diesel Backwardation and Cracks Remain Strong Amid Sanctions Risk

ICE Gasoil front month is holding near the highest since July and US diesel crack spreads are the highest since March as supply concern are still priced into diesel markets following the latest US sanctions on Russia.

• The prompt ICE Gasoil time spread is back up to $7.5/mt although below the peak of $8.75/mt seen at the start of this week.
• The Jan25-Dec25 spread remains strong at $24.25/mt after reaching the highest since April at $27.75/mt on Jan. 13.
• The diesel market was already in backwardation with support from cold weather in the northern hemisphere.
• At least 150kbpd of Russian diesel exports from Gazprom Neft and Surgutneftegas refineries are at risk due to sanctions, Energy Aspects said.
• Markets are pricing higher crude costs into fuel prices and refining runs with no big impact on Asian markets directly while the market would eventually adapt to the new sanctions, Reuters sources suggested.
• US distillate stocks were last week 4.3% below the five year average, Singapore Middle Distillates inventories are 6.4% below although European ARA Gasoil stocks are 16.9% above normal.
  • Gasoil FEB 25 up 0.7% at 759.5$/mt
  • ULSD FEB 25 up 0.2% at 2.62$/gal
  • Gasoil FEB 25-MAR 25 up 0.25$/mt at 7.25$/mt
  • Gasoil JUN 25-DEC 25 up 0.75$/mt at 23.75$/mt
  • EU Gasoil-Brent up 0$/bbl at 19.54$/bbl
  • US ULSD crack down 0.1$/bbl at 31.09$/bbl