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DIESEL: Diesel Cracks Support on Lower Runs and Supplies Ahead of Winter

DIESEL
BulletEnergy BulletsCommodities

Signs of refinery run cuts, particularly in Europe, and ongoing maintenance still support a cautiously bullish outlook for ICE Gasoil and heating oil cracks in the medium term, according to Sparta Commodities.

  • Europe refinery runs and distillate supplies may recover in the next four to six weeks with margins back in positive territory although recent crude strength due to geopolitical risk has weakened the gasoil crack.
  • European diesel imports to reduce marginally in late October despite VLCCs still heading to the region amid refinery maintenance and run cuts.
  • Heating oil cracks and spreads remain under pressure due to unseasonal builds in PADD 1 diesel stocks although the approaching winter is expected to support demand.
  • An ongoing drought in Brazil / Latin America and continuing reduction in Russian diesel exports are also supportive.
  • Middle Eastern diesel arbitrages continue to favour East-bound flows, while US Gulf Coast arbitrages into North-West Europe have closed amid rising transatlantic TC14 MR rates.
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Signs of refinery run cuts, particularly in Europe, and ongoing maintenance still support a cautiously bullish outlook for ICE Gasoil and heating oil cracks in the medium term, according to Sparta Commodities.

  • Europe refinery runs and distillate supplies may recover in the next four to six weeks with margins back in positive territory although recent crude strength due to geopolitical risk has weakened the gasoil crack.
  • European diesel imports to reduce marginally in late October despite VLCCs still heading to the region amid refinery maintenance and run cuts.
  • Heating oil cracks and spreads remain under pressure due to unseasonal builds in PADD 1 diesel stocks although the approaching winter is expected to support demand.
  • An ongoing drought in Brazil / Latin America and continuing reduction in Russian diesel exports are also supportive.
  • Middle Eastern diesel arbitrages continue to favour East-bound flows, while US Gulf Coast arbitrages into North-West Europe have closed amid rising transatlantic TC14 MR rates.