Diesel E/W: Asia loosens while Europe keeps the ICE leg supported

• Bias remains to sell rallies in prompt SG 10ppm East/West, with headline and geopolitical risk the key caveat. Asia is looking better supplied, while tighter European stocks keep ICE gasoil supported.
• Korea has secured more than 85% of its normal monthly crude import requirement for May, while the crude swap system may be extended to July. This lowers run-cut risk and removes some panic premium from Asian diesel.
• South Korean and Taiwanese refiners have sold more May-loading diesel and jet cargoes than in April. Volumes remain below pre-conflict levels, but export availability is improving.
• Singapore looks heavy, Europe looks tight. Canada-to-Singapore arb barrels have arrived, Singapore middle distillate stocks are at multi-month highs, while ARA stocks are reportedly at multi-month lows.
• The Sikka-to-Europe arb has improved over the past few days, but prompt economics still largely point East, so Asian length is not being cleared fast enough. One important caveat is compliance: post-EU sanctions on products made from Russian feedstock, WCI diesel flows into Europe will remain subject to stricter buyer checks and scrutiny, even when the paper arb looks workable.
• China is set to resume higher product exports from May, primarily led by jet and gasoline. But the shift away from an export-ban stance still gives diesel a relief valve, especially with regional runs expected higher month-on-month.
• Russian infrastructure attacks can push E/W even more negative. Any disruption to Russian diesel or gasoil supply would strengthen ICE gasoil and widen E/W through European strength as well as Asian weakness.
• Net-net, diesel E/W stays biased wider and more negative in prompt. Asia has more barrels, Singapore stocks are high, Europe is stock-tight, and ICE gasoil still has upside risk.

About the Author
Abhishek is a Senior Oil Market Analyst at Sparta Commodities, based in Dubai, with a background spanning trading and analytics. Before joining Sparta, he held roles at Litasco, LSEG, and Reliance, where he focused on oil market analysis, spec trading, and broader oil market dynamics.
Connect: https://www.linkedin.com/in/akumardubai/

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