East Asian diesel strength and a potentially cold winter must be monitored, but until we start to feel the effect of global maintenance starting mid Q1 2025, we are marginally bearish middle distillate from here

Commentary summary:

• USGC TA arbs close almost entirely due to freight increases.

• Whilst Mid-East diesel arbs still point East, the margin between East and West in comparison to November has declined substantially.

• Global spreads and cracks have largely increased over the last week.

• The HOGO continues to narrow on the back of increasing US crude runs.

• The GO and jet E/Ws continue to largely narrow due in large part to East Asian diesel strength.

• A difficult one to call still, with some short-term diesel strength to manifest in the very prompt, but we would be looking to get short very very soon.

(January’s global distillate cracks)

As discussed in last week’s commentary, “The immediate outlook for Q1 2025 appears bullish, but despite turnarounds and a cold approaching winter, the time to get short feels around the corner”, global middle distillate cracks have shown gains over the past week, continuing the upward trend seen in recent months.

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.