Distillate
Diesel
There are more and more worries about Asian crude procurement again while China looks to step back from max product exports.
Sikka barrels were pointing strongly West early in July, but now the advantage has been eroded and arbs once more point East again.
Added to this, despite strong Singapore diesel premia, all regional arbs (North Asia and China) appear closed into the city state. This will only provide more bullish strength in the GO E/W.
At some point Europe will try to fight for these barrels – likely during lower temperatures and seasonal autumn turnarounds. But it will be choppy! Q1 2027 global but particularly European diesel cracks looks like a strong buy trade.
Singapore and as discussed earlier USGC regrades look likely to weaken further from here.
These need to weaken to reopen the major jet arbs into the high jet pricing of Europe.
Singapore regrade and USGC jet regrades look like a pretty strong sell trade even from these record low levels.
RBHO (and GOFOs actually) has been doing all it can to increase global diesel and jet yields.
Though looking at US diesel and jet yields, it seems unlikely that there is much more to give.
There has to be severe doubts if we build enough diesel stocks globally before the turnaround period starting globally in September/October.
