Middle Distillates
Market Overview
Diesel: arbs, diffs, and spreads
Diesel fundamentals in the Americas largely feel priced in following the MoU signing on 15 June 2026.
US diesel inventories remain well below the five-year minimum, largely closing arb opportunities for Houston exporters into Europe or Asia.
Expectations of improving AG supply, but no return to normality, make the weakening of spreads and cracks reasonable.
EIA data shows Gulf exports already slowing; the USGC 10ppm diff should continue to weaken as PADD 3 inventories climb, with negative summer RB/HO values prompting continued yields towards diesel.
Jet: Record high jet stocks may build further in coming weeks…
July USGC 54 swaps have declined to -30 cpg since mid-May, driven by the divergence between jet and diesel stocks amid global jet maximisation.
Jet arbs into NWE and the Med remain closed, with LATAM windows such as Quintero Bay favouring Singapore over the USGC.
As normalisation plays out, record-high jet stocks and a weak export outlook may push already record-low USGC jet diffs even lower.
