Middle Distillates
Market Overview
Diesel: The rally looks to continue
US retail diesel prices hit an all-time high as inventories draw early into US harvest season.
This has prompted renewed conversation by US government officials surrounding a diesel export ban, though nothing is currently official.
The loss of E/W pipe flow is impacting European crude procurement, with Med and Asian balances looking uncertain, reopening diesel arbs into Europe for October loading.
With added open arbitrage opportunities into Brazil, and Saint John undergoing a two-month seasonal maintenance period, HO spreads remain firmly bullish despite high valuations.
Jet: Asia tightens the market
Import volumes from Asia supplying the USWC indicate the first changes within the US as the market corrects for risk to Asian crude supply due to the E/W pipeline repairs.
This suggests that Los Angeles sales premia are set to rise over the coming weeks as PADD 5 inventories decline from their currently healthy levels.
Gains in the gasoil E/W and in regional Asia–USWC freight, alongside a weakening HOGO, are closing arbs to the USWC.
