Even before Hurricane Harvey deluged the Texas Gulf Coast, shuttering more than a dozen refineries in the process, the Atlantic basin diesel market had been tightening significantly. The storm can rightly be called the proximate cause of the rally in diesel cracks and timespreads over the last mo..
A month ago, the gasoline market was contemplating a tricky Q4 17 amid expectations that the switch to winter gasoline and surging US refinery runs would lead to a steady build in inventories as demand seasonally slowed. But then Hurricane Harvey knocked as much as 4 mb/d of refining capacity off..
For much of the summer, the main worry for the fuel oil market has been the supply response due to surging fuel oil cracks. Asian fuel oil supplies likely grew y/y in July by 44 thousand b/d, as refiners raised yields, but regional demand grew even faster, by 54 thousand b/d, as bunker demand in..
Atlantic basin gasoil markets are entering the autumn in a position of strength on the back of solid demand, unplanned global refinery outages, and Latin America’s recurrent refinery problems. In the case of Europe, ULSD looks tight even though imports of US diesel are set to jump to a record hig..
Despite surging US refinery runs, strong domestic demand and ample export opportunities have kept product stocks under control. Indeed, the strength in product spreads and cracks belies the continued concern in the market over the sustainability of demand growth this year. The transition to winte..
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..