US diesel arbs to NWE, WAF and LATAM open as EIA reports diesel stocks in free fall
‘- According to EIA data for the week ending April 17th, diesel stocks continue to decline. Over the past nine years, only 2022 and 2025 have recorded lower stocks at this point in the season. PADD 2 and PADD 5 have been the most affected regions, while PADD 3 has begun to draw significantly.
– To capture margin amid weaker middle distillate cracking, refiners have pushed implied diesel yields to just under 31% nationally, up from approximately 29.9% a year ago.
– Diesel demand has thus far remained healthy, as concerns of demand destruction have yet to materially show on US weekly data.
– The USGC TC14 arbitrage window (April 21–25 loading, May 16–20 arrival) has reopened into NWE, as regional FOB prices and freight rates have both weakened. Vessel supply-demand balances are supportive at +8, with the 7-day forward vessel count at 19 against implied demand of 11. That said, from an export margin perspective, USGC arbitrage economics continue to favor WAF and LATAM (including Brazil) flows over NWE.
– NYH likewise benefits from strong export margins towards WAF and LATAM, with arbs to NWE and MED open as HOGO has remained weak and generally rangebound.
– As noted in Neil Crosby’s earlier piece, USGC–Singapore LR1 arbitrage margins have closed as GO East/West spreads have widened. Meanwhile, Sikka–Singapore arbitrage margins have similarly improved into positive territory, driven largely by declining FOB values.
– With physical oil remaining inaccessible via the Strait, a key development is the underlying crack spreads, which as of today have turned negative for almost all grades across Far East simple complexity refiners. This points to a likely rationalization of runs over the coming weeks, which should in turn support diesel crack spreads. The loss of this supply (as reflected in US inventory data) would similarly put upward pressure on spreads. The broader view remains one of weakening Asian demand compounded by continued supply losses and de-stocking.
Real time alerts, set to your specifications
Continue reading
The calm in physical won’t last forever
Plenty market chatter about the incredible weak state of crude diffs with North Sea almost below...
08 MAY 26 - 13:01
MR ballaster build: supply pressure mounting across key regions
MR ballaster counts have risen sharply over the past two weeks, with the most pronounced moves in...
08 MAY 26 - 10:01