Free Trial

Prompt Gasoil Spreads at Parity Reflect Easing Supply Concern

DIESEL

The European Gasoil prompt time spreads are holding near parity after curve backwardation softened during the first half of April taking the prompt spread to the lowest since May 2023. Spreads are seeing downside pressure from healthy supplies into Europe and rising inventory levels since January.

  • The Jun24-Dec24 spread has also fallen from a high of 33.5$/mt on April 3 to 15$/mt today.
  • Europe is seeing increase flows from countries such as US and Turkey to help offset Red Sea shipping disruption.
  • Lower freight rates have reduced the import costs from India according to FGE.
  • Drone attacks on Russian refineries in the early part of this year raised concerns about a reduction in supply to global markets but the “much-feared loss of Russian diesel has also so far failed to show up meaningfully in ship-tracking data,” said Eugene Lindell at FGE.
  • Data last week showed European ARA Gasoil stocks up to just 0.7% below normal compared to over 24% below normal in late January.
  • The Europe diesel cracks spread is also trading at the lowest since Jul 2023.
    • Gasoil MAY 24 down 0.9% at 810$/mt
    • ULSD MAY 24 down 0.9% at 2.63$/gal
    • Gasoil MAY 24-JUN 24 down 0.5$/mt at -0.25$/mt
    • Gasoil JUN 24-DEC 24 down 2$/mt at 15$/mt
    • EU Gasoil-Brent down 0.2$/bbl at 19.5$/bbl
    • US ULSD crack down 0.3$/bbl at 25.79$/bbl


Source: Bloomberg

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.