Diesel remains surplus product in dire search for outlets around the globe
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Global seaborne diesel flows are continuing their steady rise observed over the last five quarters and global diesel cracks are feeling the pressure. We could even be in for an all-time high above 8mn b/d in July (excl. intra-country flows), and are set to see the third month in a row above the respective 2019 level.
And even as refineries adjust to poor middle distillate margins and optimise higher performing products such as gasoline and naphtha, diesel continues to make up the largest percentage of the clean products seaborne barrel which has given way to the current contango structure, a sharp contrast to the other clean products.
In addition to the already oversupplied seaborne diesel exports, Asia and the Middle East lockdowns are further exacerbating the problem by pushing unwanted barrels towards Europe. Excess barrels combined with a slow uptick in European demand have been the strongest contributors to diesel’s demise.