Refiners Could Reduce Run Rates with Falling Diesel Margins

Weak demand, strong Russian output and refiners returning from maintenance are weighing on the diesel crack spreads and could impact future run rates. The US spreads has fallen from a high of 47.4$/bbl on 20 Mar to around 29.9$/bbl today.

• Earlier this week EIA highlighted risks that economic and oil demand growth could be lower and that diesel demand is expected to contract this year compared to 2022.
• The recovery in demand in China has been slower than some expected, and the OPEC production cut and Saudi Arabia price increase have added to the pressure on refiners.
• The fall in refining profit margins has led to some Asian refiners considering run cuts according to Bloomberg. A refiner in Taiwan may reduce processing from June and one in South Korea is also are considering run cuts.
  • US 321 crack down -0.3$/bbl at 34.37$/bbl
  • US gasoline crack down -0.1$/bbl at 36.72$/bbl
  • US ULSD crack down -0.4$/bbl at 29.79$/bbl
  • EU Gasoline-Brent down -0.2$/bbl at 20.23$/bbl
  • EU Gasoil-Brent down -0.2$/bbl at 16.87$/bbl