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OIL: Goldman Lowers Gasoil Margin Forecast Amid Weak Demand

OIL

Goldman Sachs has lowered its forecast for the gasoil margin in Northwest Europe by $2/bbl to $27/bbl by December on a weakening demand outlook, according to Bloomberg.

  • Weakness in distillates is also driven by strong refinery throughput.
  • Diesel demand weakness has been widespread given the warm global winter. The weakness is most pronounced in China which has displaced 0.8mb/d of distillate demand with a significantly increase in LNG-powered trucks over the last decade.
  • Refiners will be incentivized to switch more than 1mbbl of production from distillates to gasoline due to a $15/bbl increase in gasoline versus diesel since the start of March.

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