Diesel Backwardation Holding Strength Due to Tight Supplies

Diesel markets recover some earlier losses with the market still tight amid low inventories and sensitivity to any supply outages while bullish positioning is also supporting the market.

• Data last week showed US distillate stocks nearly 17% below the five year average, Singapore Middle Distillates inventories 32.9% below average and European ARA Gasoil stocks are 11.5% below.
• ICE Gasoil managed money net long positions were last week reported at the highest since March 2022 and Nymex diesel the highest since Feb 2022.
• Russia's seaborne oil product exports in July rose by 3.8% month on month to 10.533m metric tons as seasonal refinery maintenance slowed down.
• European Gasoil backwardation remains strong reflecting the tight market but has drifted down from the highs seen late last week.
  • Gasoil SEP 23 down -1% at 907.75$/mt
  • ULSD SEP 23 down -0.1% at 3.12$/gal
  • Gasoil SEP 23-OCT 23 down -1.25$/mt at 13$/mt
  • Gasoil DEC 23-DEC 24 down -3.5$/mt at 85.25$/mt
  • EU Gasoil-Brent up 0.1$/bbl at 33.9$/bbl
  • US ULSD crack up 0.6$/bbl at 48.32$/bbl