Diesel Markets Are Soaring
Diesel markets are jumping everywhere, a positive indicator for oil prices more widely.
In Asia, the lowest inventories in years have driven margins from making the fuel to a four-month high. Winter there is chillier than usual and demand for transport, industrial and heating fuels are getting a boost.
The continent is contending with significantly less supply from China, after the oil refining giant slashed its fuel export quotas in the first allocation for 2022.
In the U.S., diesel prices have surged to highs not seen since 2014, driving up the cost of trucking, farming and -- in parts of the country -- heating homes. The surge is a blow to the Biden administration’s efforts to tame inflation.
They’ve surged as U.S. refiners began a heavy maintenance season this month, when stockpiles there are already at eight-year lows. A fire at one of the country’s largest refineries took out even more fuel-making capacity at the end of last year.
Rising jet fuel demand has also eaten into diesel output in recent months because refiners have scope to toggle between diesel and jet fuel, and they’re increasingly choosing the latter.
That leaves Europe as the last big diesel-consuming center, and the market is strong there too in part because of the global effect of China’s reduced exports.
So-called crack spreads, the fuel’s margin to crude, and time spreads that denote the strength of immediate supply-demand balances are rallying hard.
Despite the strong market in Europe, the continent is still set to send large cargoes of the fuel to the U.S., further tightening the region’s market.
The strong prices are a positive sign for the wider oil market. Diesel -- consumed in cars, trucks and heavy machinery among other things -- drives the cost of a wider group of petroleum products known as middle distillates that collectively account for about a third of the world’s fuel consumption.
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Rooftop Solar Now 4th Largest Source of Electricity in Australia
- US Confirms Reimposition of Oil Sanctions against Venezuela
- EU, Industry Players Ink Charter to Meet Solar Energy Targets
- Analyst Says USA Influence on Middle East Seems to be Fading
- Russian Ships to Remain Banned from US Ports
- Brazil Court Reinstates Petrobras Chair to Divided Board
- EIB Lends $425.7 Million for Thuringia's Grid Upgrades
- Var Energi Confirms Oil Discovery in Ringhorne
- Seatrium, Shell Strengthen Floating Production Systems Collaboration
- An Already Bad Situation in the Red Sea Just Got Worse
- What's Next for Oil? Analysts Weigh In After Iran's Attack
- USA Regional Banks Dramatically Step Up Loans to Oil and Gas
- EIA Raises WTI Oil Price Forecasts
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Venezuela Authorities Arrest Two Senior Energy Officials
- Namibia Expects FID on Potential Major Oil Discovery by Yearend
- Oil Markets Were Already Positioned for Iran Attack
- Is The Iran Nuclear Deal Revival Project Dead?
- Petrobras Chairman Suspended
- Oil and Gas Executives Predict WTI Oil Price
- An Already Bad Situation in the Red Sea Just Got Worse
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil and Gas Execs Reveal Where They See Henry Hub Price Heading
- Equinor Makes Discovery in North Sea
- Macquarie Strategists Warn of Large Oil Price Correction
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Standard Chartered Reiterates $94 Brent Call
- Chevron, Hess Confident Embattled Merger Will Close Mid-2024
- Analysts Flag 'Remarkable Feature' of 2024 Oil Price Rally