Low stocks
Diesel stocks in Europe, most easily tracked at the Amsterdam-Rotterdam-Antwerp refining hub, are at historic lows and at the lowest monthly average levels in over a decade. Backwardation continues to discourage storage of product.
Inventories elsewhere are heavily depleted, including at key hubs in the US and Singapore, as global diesel levels are well below recent averages. Platts Analytics has warned stocks are "not building fast enough ahead of harvest and heating seasons."
Demand on the rise
With winter approaching, demand for heating using diesel and rampant gas-to-oil switching, given the likelihood the global gas crisis will dwarf any difficulties in oil market tightness, will keep demand for the middle distillate stronger than economic conditions may otherwise suggest.
"The diesel crisis is far from over, but the drivers are changing as we head into shoulder season," said Mark Rossano, CEO of C6 Capital Holdings. "As winter comes into focus, the global market now has to contend with mother nature as storage is very low and people haven't even started using their heating."
Russian flows to fall
Russian gasoil exports to Europe are expected to drop as EU sanctions against imports of Russian products come into effect in February 2023.
Russia is a major exporter of diesel and gasoil, with Russian oil products accounting for well over a third of European oil imports.
Some market watchers are skeptical on the extent of the fall given the difficulties in tracking blending products, but with year-end EU curbs also set to hit the global shipping insurance market, there will indeed be uncertainty over tanker accessibility after December.
https://www.spglobal.com/commodityi...gs/oil/082322-fft-diesel-prices-demand-stocks