Diesel Spreads Holding Strong Suggesting Tight Supply Concern

Gasoil time spreads are stable today and holding above the low from Friday but down from the peaks seen earlier in June driven by refinery outages and low inventories. Diesel cracks are edging up from the small dip late last week. The risk that further civil unrest in Russia could impact future oil and gas production and exports is adding upside support to energy markets.

• The strong curve backwardation suggests a tighter market supply at a time when demand is normally muted before an increase again heading into the winter period.
• Diesel supplies to Europe from the Middle East and India are making up for the missing Russian supplies as global trade flows are redirected although total diesel/gasoil flows into Europe are this month set to be the lowest for three months.
• Diesel demand in Germany has been falling this month as lower truck mileage, construction activity and industrial confidence weigh on consumption according to an Argus survey of retailers.
• An operational issue due to weekend weather conditions at BP's 435kbpd Whiting refinery is expected to be resolved in the coming hours.
  • Gasoil JUL 23 up 1.2% at 710$/mt
  • Gasoil JUL 23-AUG 23 unchanged at 10.75$/mt
  • Gasoil DEC 23-DEC 24 up 1.75$/mt at 22.5$/mt
  • EU Gasoil-Brent up 0.9$/bbl at 19.5$/bbl
  • US ULSD crack up 1.1$/bbl at 31.63$/bbl