Diesel Markets Tick Higher on Easing Demand Concerns

Diesel crack spreads continue to edge higher following on from the gains seen yesterday. The move follows the move in crude on the back of easing demand concern after the US Senate passed legislation to suspend the debt ceiling and impose spending restraints to prevent a default in the US.

• The impact of persistent inflation on US Fed policy is still unclear and weaker manufacturing activity in China could also weigh on global demand. China is weighing at a new basket of measures to support the property market and economy according to Bloomberg sources today.
• EIA data yesterday showed a small build in distillates inventories while four week average implied demand dipped slightly but held onto much of the gains seen the previous week.
• A fall in diesel exports from Russia in May amid refinery maintenance is also supportive of global prices although exports remain above the seasonal five year average.
  • Gasoil JUN 23 up 1.9% at 694.75$/mt
  • US ULSD crack up 0.2$/bbl at 27.37$/bbl
  • EU Gasoil-Brent up 0.2$/bbl at 16.12$/bbl