Diesel Margins Set to Rebound: Goldman Sachs

Distillate cracks have likely bottomed out and are set to rebound from the latest plunge since early February, Goldman Sachs said in a note, cited by Bloomberg.

• Cracks declined around $10/bbl since early February, but low distillate inventories, strength in gasoline markets, and Asian refining margins near cost-support should benefit the outlook for a rebound, the note said.
• The demand outlook for diesel also looks stronger than for gasoline as air travel continues to rise, while gasoline demand slows with increasing use in electric vehicles.
• Additional upside is expected from a structural bull market in oil tankers that will raise transport costs.
• The bank sees an upside to Dec 2024 ARA gasoil-Brent cracks of around $6/bbl in the base case to $29/bbl vs $23/bbl.
  • Gasoil MAR 24 up 0.7% at 835.25$/mt
  • ULSD APR 24 up 0.3% at 2.66$/gal
  • Gasoil MAR 24-APR 24 down 2.75$/mt at 18$/mt
  • Gasoil JUN 24-DEC 24 up 2$/mt at 29.75$/mt
  • EU Gasoil-Brent up 0$/bbl at 24.48$/bbl
  • US ULSD crack up 0.3$/bbl at 33.49$/bbl