The moderate rally of the past week in the middle distillate complex is set to continue but the improvement in refining margins and ongoing tariff effects are an important moderating factor

Commentary summary:

• USGC TA diesel arbs are marginally closed whilst AG/WCI diesel increasingly points East.

• Global diesel and jet cracks largely increase over the past week, particularly HO spreads.

• US tariffs are having a frankly disastrous effect on the stock markets as well as global petchem markets.

• World events inevitably lead to major doubts about global diesel demand moving further into Q2 and Q3, at least for now.

• We remain largely bullish the middle distillate complex in the short-term, but the ongoing confusion arising from tariffs makes holding a firm view difficult.

Singapore’s middle distillate markets appear to have turned a corner. Following last week’s commentary. “While regional turnarounds and AG/WCI diesel flows pointing East suggest a neutral view for now, deteriorating refining margins reinforce our continuing neutral-to-bullish medium-term view on Singapore diesel and jet spreads and cracks.”

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.