The strength in fuel oil has gone on for so long that it risks breeding complacency. Strong cracks have raised expectations that supplies will rise and snuff out the rally. We do think supplies will rise, and there are signs that some of the demand story’s most bullish elements are fading, but th..
Indian ULSD buying may have ebbed, but the effects of the country’s unexpected buying spree on diesel markets will reverberate for a few more months. Indian buyers have stepped back from the market, but for the Atlantic basin, the damage has been done. East of Suez refiners typically supply at le..
Gasoline markets are looking more balanced as we move through the peak period for demand in the Atlantic basin. Despite US refineries processing record volumes of crude oil, refinery problems in Latin America have ensured that US Gulf Coast refiners have had an outlet for a lot of their productio..
Asian fuel oil cracks and timespreads have performed strongly since late May despite bunker fuel demand moderating. Hot weather has come early, boosting consumption even as stalwarts such as Japan and South Korea have begun to reduce their use of the product. We see the softness in bunker demand..
OPEC’s policy paralysis in the face of a hostile oil market spells trouble for middle distillates. For months, we have been largely positive about diesel over the spring on strong demand and cautious about Q3 17 balances. At our most constructive, we argued in April that early Q3 17 could see som..
Gasoline demand fundamentals are good, but in the absence of decisive action from OPEC, there is too much supply. A strong Atlantic Basin summer gasoline season always hinged on the crude market tightening enough to constrain margins. For a while, the OPEC-led output cuts appeared to offer that p..
Fuel oil markets have struggled over the last month, and Asian fuel oil swaps have fallen into contango, as Middle Eastern exporters have pushed out large volumes amid mild weather in April and refinery maintenance that has led to an increase in the production of dirty products. The rise in Middl..
Diesel markets worldwide are exhibiting considerable physical strength, but futures markets are burdened with worry that the market is about to hurtle off a cliff due to rising supply. With some 5.5 mb/d of refining capacity due back online between May and July after a hefty spring turnaround sea..
A great deal of worry has swept the market over the supposed weakness of US gasoline demand. We still view the softness in US demand in the first part of this year as an aberration. It is unlikely that the underlying patterns of US gasoline demand have so fundamentally changed that a major contra..
Fuel oil’s strength is finally catching up with it. Strong cracks in late 2016 and early 2017 gifted short-term decision makers at simple refineries with the unambiguous signal to up their runs, and they duly obliged. In the first two months of the year, European runs jumped by 0.4 mb/d, despite..
The outlook for middle distillates continues to improve. US stocks are down by more than 20 mb since the start of the year and inventories are draining elsewhere too. The drawdowns have halved the overhang in visible middle distillates inventories to just 17 mb, and with Asia and the FSU only sta..
Gasoline markets have tightened considerably over the last month, thanks in part to a wave of buying by Venezuela’s PDVSA amid a spiralling crisis at its refineries. This buying came just as resurgent West African gasoline demand soaked up supplies and as European refineries entered turnarounds...
As the data for January and February start to trickle in, it is clear that the short-circuiting of the bull play seemingly planned for Asian fuel oil markets was an astute move. Fuel oil demand continues to rack up impressive numbers, but the refiner response to high cracks has also led to sharpl..
Wavering faith in the crude rebalancing story prompted a wave of selling this month and product markets were not immune, but it was bizarre for diesel to be caught in the panic. Globally, the overwhelming majority of recent economic headlines have been undeniably bullish for diesel. The only real..
Global gasoline markets corrected sharply in early March, precipitated by a rumoured shift in arcane US biofuels blending rules and another slump in Asian gasoline cracks, which had enjoyed a strong start to the year. The correction was much-needed. The market had bid up summer-grade gasoline pri..