Gasoil Resumes Rally Amid Tight European Supply

Global distillate cracks remain strong with a tight European market amid supply issues, low inventories and with net bullish positioning.

• Diesel cracks are steady today after yesterday resuming a rally seen throughout July with front month Gasoil-Brent up from a low of around 17.3$/bbl on 3 Jul up to 27.7$/bbl today. The Gasoil Dec23-Dec24 time spread has risen in the same period from 21.75$/mt to 57$/mt.
• Options for European resupply look increasingly difficult from September onwards with a narrowing East/West spread according to Sparta Commodities. European refineries have already been running at maximum diesel versus jet according to Sparta sources and European resupply will continue to rely on shipments from the USGC.
• Recent supply issues this month include Shell Pernis CDU issues, halted deliveries from several German refineries, and a fire at Repsol’s Bilbao refinery.
• European ARA stocks earlier this month reached the lowest since December and were last week nearly 16 % below normal. The updated data is due out later today.
• ICE Gasoil managed money net positions extended the recent gains last week up to the highest since March.
  • Gasoil AUG 23 up 1% at 840.5$/mt
  • Gasoil AUG 23-SEP 23 up 1.5$/mt at 11$/mt
  • Gasoil DEC 23-DEC 24 up 2.5$/mt at 56.75$/mt
  • EU Gasoil-Brent up 0.1$/bbl at 27.64$/bbl
  • US ULSD crack down -0.1$/bbl at 40.19$/bbl