Diesel Sensitive to Supply Issues but Eases Back from Earlier Gains

Diesel markets remain sensitive to disruption to supplies with crack spreads and Gasoil time spreads earlier rallying amid reports of a pipeline leakage at Shell’s Pernis refinery in Rotterdam. Earlier this week diesel had seen gains supported by potentially tighter European supplies following disruption to wholesale supplies from three German oil refineries this month. Spreads have since eased back slightly lower again with upside still limited by weak demand.

• US EIA distillates four week average implied demand this week fell back towards the seasonal levels seen in 2020 with a 4% decline on the week with low fuel consumption between the planting and heating season according to Bloomberg.
• Inventories are low with data this week showing US distillate stocks 13.1% below the five year average, Singapore Middle Distillates inventories 26.5% below average and European ARA Gasoil stocks are 16.2% below.
• European diesel imports rebounded in early July on increased shipments from the East of Suez and Turkey, following two months of declines according to Vortexa data. Europe’s imports from the Middle East have risen by 10% from June.
• Russian oil products exports declined by around 135kbpd in the first seven days in July but future exports could be supported with offline primary oil refining capacity seen rising by 40% in August from July according to Reuters.
  • Gasoil AUG 23 down -0.1% at 755.25$/mt
  • Gasoil AUG 23-SEP 23 down -0.5$/mt at 4.5$/mt
  • Gasoil DEC 23-DEC 24 up 0.5$/mt at 34$/mt
  • EU Gasoil-Brent up 0.5$/bbl at 20.24$/bbl
  • US ULSD crack up 0.3$/bbl at 33.02$/bbl