A strong argument to be long June ICE GO, but the weakness in both HO and Singapore diesel indicates the medium-term direction

Commentary summary:

• USGC TA diesel arbs closed and point to Latin America. Whilst AG/WCI diesel still points East, the margin versus West has narrowed significantly since early May.

• ICE GO spreads gain significantly over the past week whilst Sing diesel and HO spreads come off.

• Refining margins remain strong globally as the EU, US and Asia move further out of their respective refinery maintenance periods.

• A strong argument to stay long ICE GO in the prompt but the weakness is set to continue in HO and Sing diesel to point the direction in the medium term.

Singapore’s middle distillate complex finds itself caught in a tug of war between short-term price recoveries and a looming overhang of supply.

James Noel-Beswick is Commodity Owner for Sparta. Before joining Sparta, James worked as an analyst for likes of BP and Shell and leads our continued development of the distillate product vertical.