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OIL PRODUCTS: US East Coast Diesel Oversupply to Linger: Argus

OIL PRODUCTS
USEnergy BulletsNorth AmericaBulletCommodities

In 2024, the US Atlantic coast distillate market faced high inventories and flat demand, a trend expected to continue in 2025, Argus said.

  • The US Gulf coast, supplying 70% of diesel on the Atlantic Coast, produced more distillates than needed domestically, 7% above 2024 levels.
  • Despite soft demand, USGC refineries-maintained production due to export opportunities, especially to Europe. Distillate stocks in key Atlantic coast states were significantly higher than in previous years.
  • Exports from the GC were 10% higher on the year, but not all excess supply was exported, leading to surplus in the Atlantic coast.
  • Economic growth in Europe and changes in global supply chains post-Russia-Ukraine war are expected to sustain export opportunities.
  • However, domestic diesel demand, traditionally linked to GDP, has decoupled due to the US economy's shift towards non-manufacturing services.  With GDP growth projected at 2.5% in 2025, diesel demand is unlikely to spike.
  • Consequently, market participants may face challenging economic conditions in 2025 due to narrowing refining margins, dwindling demand, and sustained high production.
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In 2024, the US Atlantic coast distillate market faced high inventories and flat demand, a trend expected to continue in 2025, Argus said.

  • The US Gulf coast, supplying 70% of diesel on the Atlantic Coast, produced more distillates than needed domestically, 7% above 2024 levels.
  • Despite soft demand, USGC refineries-maintained production due to export opportunities, especially to Europe. Distillate stocks in key Atlantic coast states were significantly higher than in previous years.
  • Exports from the GC were 10% higher on the year, but not all excess supply was exported, leading to surplus in the Atlantic coast.
  • Economic growth in Europe and changes in global supply chains post-Russia-Ukraine war are expected to sustain export opportunities.
  • However, domestic diesel demand, traditionally linked to GDP, has decoupled due to the US economy's shift towards non-manufacturing services.  With GDP growth projected at 2.5% in 2025, diesel demand is unlikely to spike.
  • Consequently, market participants may face challenging economic conditions in 2025 due to narrowing refining margins, dwindling demand, and sustained high production.