Steep rally in European diesel spreads and premia brings AG/WCI and USGC MR arbs close to workable, whilst jet arbs into Europe close further

Commentary summary:

• Global diesel spreads and cracks exhibit extreme gains over the last week.

• USGC MR & AG/WCI LR2 ULSD arbs close to being workable into Europe. Jet arbs into Europe close further under Singapore regrade strength.

• Sanctions on Russia and attacks on Russian refinery infrastructure and their probable effects on European and global diesel supplies continue to be the driving factor.

• Whilst there is perhaps some short term ULSD bearishness to come as arbs open into Europe, the overriding concern must be are we building enough diesel stocks as we head further into Winter?

The Asian distillates complex has surged higher over the past week, mirroring the global rally in middle distillates that has gripped markets since late last Friday.

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.