Emerging market risks are growing for diesel, including Turkey’s slowing imports and Brazil’s unsustainable subsidy programme. Turkish marketers are running down stocks to meet demand and preserve foreign exchange, which is pushing Indian and Saudi diesel into other European markets. Atlantic bas..
Total US gasoline stocks have risen by only 4 mb over the last month, but the market is focussing on what it thinks will come in the coming months. We had expected tightness in summer grade RBOB to support prices in the near term, but with high imports now set to continue for the rest of the mont..
A curious spate of incidents involving bad-quality bunker fuel underscores the challenges the industry faces over the coming months as suppliers drain tanks and start making new blends. The problems have spurred suggestions that IMO-compliant VLSFO could face similar challenges, lulling MGO bulls..
The situation in ARA is getting better for bullish bets. The proximate cause is refinery problems, some caused by the heat in Europe, that have tightened up short-term balances just as refinery runs were supposed to be at maximum levels. Last month, we had forecast European diesel inventories wou..
Refinery problems and stronger-than-expected demand have tightened the global gasoline market over the last month. US inventories may struggle to return to early July levels of 239 mb over the rest of the summer if operational problems continue to bedevil refiners. While there may be little risk..
It’s too soon to write off the strength in the market. Due to the drop in eastbound long-haul shipments in recent months, inflows into Singapore will be low again in August and with the US continuing to push for maximum cuts in Iranian oil exports, including fuel oil, Asian supply may continue to..
Given where Atlantic basin diesel stocks are, ICE gasoil timespreads are clearly underperforming relative to recent history. The risk-reward equation alone suggests the autumn timespreads are cheap, though stocks are set to build through August, which is likely to limit the upside in the very sho..
RBOB gasoline is tight on the USEC, but conditions in the broader global market have hardly improved. Combined stocks in PADDs 1, 2 and 3 moved into a small surplus in early July, marking the first time that stocks have been higher y/y since Hurricane Harvey. ARA and Singapore stocks are tracking..
Genuine tightness continues to grip fuel oil markets largely due to the challenges of making on-specification material, sending prompt timespreads up above $5 per tonne in both Asia and Northwest Europe. A dearth of exports to Asia from the Atlantic basin in recent months and structural shifts in..
ICE gasoil spreads have trended lower over the past month (barring the expiry of the June contract) thanks to the quirks of ARA pricing, but elsewhere the data continue to back our view that stocks are drawing hard. Indeed, if the spike in June prices on a few refinery wobbles and the risk o..
The struggles of Atlantic basin gasoline this June should serve as a warning for the bulls. Even with refinery outages surprising to the upside, supply is too high. In the past two years, the ‘solver’ for excess US gasoline production has been a major US Gulf Coast disruption. What would happen i..
Fuel oil markets have been roiled by the Trump administration’s withdrawal from the Iran nuclear accord. Not only does the market face the loss of heavy crude from Iran, as well as its exports of fuel oil, but deeper structural problems in the market have been made much more prominent. Huge..
Diesel balances are still hugely bullish but the market is struggling to find ways to take a view on these balances, with ARA gasoil markets confounding traders time and again this year. We don’t think the benchmark is broken, but the market needs to keep in mind that the idiosyncrasies of..
Gasoline is getting hit from both sides. Demand is coming under pressure from higher prices and supply is powering ahead despite weak gasoline cracks. The strength in diesel margins means that refining margins are unlikely to turn negative in any meaningful way. Refinery breakdowns might bring so..
With IMO 2020 looming on the horizon, and question marks persisting over Saudi fuel oil demand following major electricity tariff reforms, there is limited fresh appetite for taking risk on fuel oil. But thanks to positive developments in Pakistan, Saudi Arabia, Iran and India, there is still sco..