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Near Term Spreads in Contango with Weak Demand, Ample Supply


Near term Gasoil spreads are edging higher today but still in contango until Oct 2023 due to weak near term demand, recession fears and suggesting ample supplies. Low margins are leading some Asian refiners to consider run cuts in the coming months.

  • The Gasoil Jun-Dec fell steadily during April from backwardation at over +20$/mt down to a low of -8.5$/mt yesterday. Low inventories in the US and a declining trend in Europe have done little to support the market. US stocks are 12.4% below the five year average and ARA Gasoil stocks were last week just above normal. The updated ARA stocks are due out later today.
  • Diesel margins remain in a bearish trend with spreads holding just up from the lowest since early 2022. Spreads continue to be pressured by concerns for weak demand, refineries returning from outages and new refining capacity in the Middle East and China.
    • Gasoil MAY 23 up 1.2% at 644.5$/mt
    • Gasoil MAY 23-JUN 23 up 0.5$/mt at 0$/mt
    • Gasoil JUN 23-DEC 23 up 1.75$/mt at -6$/mt
    • Gasoil DEC 23-DEC 24 up 2.25$/mt at 11$/mt
    • US ULSD crack up 0.2$/bbl at 25.01$/bbl
    • EU Gasoil-Brent down -0.3$/bbl at 13.82$/bbl

Source: Bloomberg

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