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DIESEL: Diesel Spread Soften Slighly Following Recent Rally

DIESEL
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The ICE Gasoil time spreads rallied with the prompt to the highest since April while global distillate cracks have rallied in recent weeks although are softening today.

  • The prompt Gasoil spread has risen from near parity earlier this month up to $8.25/mt. The Dec24-Dec25 spread has seen backwardation strengthening to a high of $26.75/mt before easing back slightly with a pullback in crude prices today.
  • “Reduced PADD1 crude runs, a closed USGC trans-Atlantic arb and Middle Eastern arbs still pointing East” are supportive of ICE Gasoil despite refinery returns, according to Sparta last week.
  • Doubts remain about the speed of recover in Russian diesel exports, Sparta added.
  • Diesel imports into Europe from external suppliers are on track to drop in November to a four-month low, Bloomberg said.
  • US low stocks are supportive, but inventories typically build during December and January ahead of the USGC maintenance.
  • US distillate stocks were last week 4.75% below the five year average although European ARA Gasoil stocks have risen in November to 17.2% above normal. Singapore Middle Distillates inventories have also edged higher in recent weeks but remain 4.9% below.
  • Funds have flipped to net bullish on ICE Gasoil positioning for the first time since July although Nymex diesel positions maintain a net short position.
    • Gasoil DEC 24 down 2.1% at 683.25$/mt
    • ULSD DEC 24 down 1.8% at 2.23$/gal
    • Gasoil DEC 24-JAN 25 unchanged at 7.25$/mt
    • Gasoil DEC 24-DEC 25 down 2.25$/mt at 19$/mt
    • EU Gasoil-Brent down 0.3$/bbl at 17.23$/bbl
    • US ULSD crack down 0.1$/bbl at 24.62$/bbl
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The ICE Gasoil time spreads rallied with the prompt to the highest since April while global distillate cracks have rallied in recent weeks although are softening today.

  • The prompt Gasoil spread has risen from near parity earlier this month up to $8.25/mt. The Dec24-Dec25 spread has seen backwardation strengthening to a high of $26.75/mt before easing back slightly with a pullback in crude prices today.
  • “Reduced PADD1 crude runs, a closed USGC trans-Atlantic arb and Middle Eastern arbs still pointing East” are supportive of ICE Gasoil despite refinery returns, according to Sparta last week.
  • Doubts remain about the speed of recover in Russian diesel exports, Sparta added.
  • Diesel imports into Europe from external suppliers are on track to drop in November to a four-month low, Bloomberg said.
  • US low stocks are supportive, but inventories typically build during December and January ahead of the USGC maintenance.
  • US distillate stocks were last week 4.75% below the five year average although European ARA Gasoil stocks have risen in November to 17.2% above normal. Singapore Middle Distillates inventories have also edged higher in recent weeks but remain 4.9% below.
  • Funds have flipped to net bullish on ICE Gasoil positioning for the first time since July although Nymex diesel positions maintain a net short position.
    • Gasoil DEC 24 down 2.1% at 683.25$/mt
    • ULSD DEC 24 down 1.8% at 2.23$/gal
    • Gasoil DEC 24-JAN 25 unchanged at 7.25$/mt
    • Gasoil DEC 24-DEC 25 down 2.25$/mt at 19$/mt
    • EU Gasoil-Brent down 0.3$/bbl at 17.23$/bbl
    • US ULSD crack down 0.1$/bbl at 24.62$/bbl