Europe's Diesel Crack Spreads Remain Close to $40 per Barrel

The refining margins for diesel barges in Northwest Europe remained relatively steady at approximately $40 per barrel as the week drew to a close. This stability was observed amid tight supplies and a decline in regional stocks.

Data from Dutch consultancy Insights Global revealed that gasoil stocks stored independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub experienced a 1% decrease during the week leading up to Thursday.

Lars van Wageningen, an expert at Insights Global, attributed the very low demand for gasoil down the Rhine River to robust prompt prices in the market.

Meanwhile, distillate stockpiles in the United States, which encompass both diesel and heating oil, saw a notable increase of 3.9 million barrels last week, reaching a total of 122.5 million barrels. This figure was significantly higher than the anticipated build of 1.3 million barrels, according to data from the Energy Information Administration (EIA).

The rise in refining margins in recent weeks has prompted an acceleration in diesel imports into Europe. Raj Rajendran, an analyst at LSEG, highlighted that this uptick in imports is a result of arbitrage opportunities created by the increased margins.

Rajendran further reported that global shipments into the region were expected to total approximately 4.45 million tons in September, compared to a total of 5.1 million tons in the previous month.

Import volumes from Asia and the Middle East surged to 2.95 million tons so far in September, compared to a total of 2.41 million tons in the preceding month.

In related news, data indicated that China's oil refinery throughput reached a record high in August. This development was attributed to the efforts of processors in the world's second-largest crude consumer to maintain high run rates. Their aim was to meet the demand associated with summer travel and capitalize on the strengthening export margins.

Overall, the diesel barge refining margins in Northwest Europe remained stable near the $40 per barrel mark, with tight supplies and a decrease in regional stocks playing key roles in this market situation. The low demand for gasoil in the Rhine River area was influenced by strong prompt prices. Simultaneously, increased distillate stockpiles in the United States provided insights into the dynamics of the global diesel market. The rise in refining margins prompted a surge in diesel imports into Europe, driven by arbitrage opportunities, while China's record refinery throughput in August showcased the ongoing dynamics in the global oil and fuel sector.