The short term remains bullish for ICE GO and HO, with important monitoring needed ahead of the probable ceiling in March

Commentary summary:

• USGC TA diesel arb close to open theoretically whilst AG/WCI middle distillate arbs still point East.
• Atlantic Basin middle distillate spreads remain elevated whilst East Asian diesel spreads and cracks find a ceiling.
• Could US-Russian talks lead to the eventual removal of anti-Russian diesel sanctions?
• A cold snap across much of Europe and the US this week.
• Short term bullish for ICE GO and HO pricing, but in the medium term to find a ceiling in the same fashion as Singapore.

Singapore’s middle distillate market has seen a notable divergence over the past week. As we highlighted last week, “Singapore middle distillate stocks have been steadily drawing since early December, and with fewer expected arrivals, the outlook for Singapore diesel and jet cracks remains bullish in the near term.” While this has held true for jet spreads—also evidenced by the continued rise in Singapore regrade—diesel spreads and cracks appear to have reached a ceiling.

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.