April 30, 2024 17:57 GMT
Weakest Diesel Spreads in Years Seen Spelling Trouble for Crude
OIL PRODUCTS
Prompt diesel is trading at the widest discount to supplies for later delivery, a bearish market structure that may lead to trouble for crude prices, Bloomberg said.
- The prompt time spread for diesel is currently at the widest since Sep. 2020 at around $1.60/gal.
- Seasonal variances and higher interest rates are hampering diesel demand, which could eventually weigh on crude oil prices, according to Dennis Kissler, senior vice president at BOK Financial.
- Even amid an expected rise in air conditioning use, higher interest rates may curtail the summer boost in diesel.
- “If you see diesel in a bear market, I believe crude oil will follow,” Kissler said.
- Diesel supplies are also building in the US as refinery capacity comes back online after a heavy maintenance season and with new refinery capacity coming online globally.
- Distillate inventories, mainly diesel, are seen with a build of 0.4m bbl last week, according to a WSJ survey. Responses ranged from -2m bbl to +2.4m bbl.
Source: Bloomberg
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