Fuel markets flash supply crunch despite calmer oil prices
“There’s just not enough refining capacity left globally to deal with all this.” — Neil Crosby, Head of Research at Sparta Commodities
- Expert: Neil Crosby (Head of Research, Sparta)
- Publication: Reuters
- Market Focus: Diesel, Gasoline, Refining Margins, Crude Oil
- Geographies: Europe, US, Russia, Asia
In a recent analysis for Reuters, Sparta’s Head of Research, Neil Crosby, flags a global refining capacity shortfall as the real story behind this month’s fuel market stress, even as crude prices stay relatively subdued. European diesel margins hit a record $60-plus a barrel and the US 3-2-1 crack spread hit an all-time high of $64.58 a barrel on July 8, both moving in the opposite direction to crude. Russia’s diesel export ban, layered on top of Ukrainian strikes that have already cut its exports below 400,000 bpd, is stripping out barrels that Europe, Brazil, Turkey and West Africa now have to source elsewhere. Crosby notes that if fuel prices keep climbing, they could start to curb consumer demand, so traders should watch refining margins and product cracks as the tighter, more revealing gauge of this market than the crude price alone.
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