Rising Margins Amid Tight Supplies Encourage Higher Runs: FGE

The current oil refining “turbo margins” will encourage oil refiners to increase runs if they are able to according to FGE.

• Margins are driven by a “soaring middle distillate complex” with tight supplies to the key importing regions of NW Europe and PADD 1.
• Arbitrage spreads “have so far failed to incorporate the realities of the higher freight costs required to ship diesel from Asia to Europe through a war zone — or via Cape.”
• Peak refinery maintenance is still ongoing in the US while European works are underway and due to peak in the coming weeks.
• “Good times” for the Atlantic Basin are likely to continue for several more weeks. There is “an inter-regional diesel arbitrage window that is still closed on paper despite the latest surge in cracks.”
• Asia is supported by unplanned outages and relatively subdued clean product exports from China.