Diesel futures in Europe signal market tightness as traders face supply pressures.On Tuesday, near-term contracts hit the steepest backwardation since March, indicating limited supply as traders pay a premium for prompt fuel.Supply strains stem from recent refinery outages and a sharp drop in January shipments to the EU and UK, per Vortexa data.
The U.S. diesel market also shows supply constraints, impacting Europe. U.S. stockpiles are at their lowest for this time of year since 2014, with futures in strong backwardation.“Cargoes diverting to the U.S. and reverse arbitrage from Amsterdam-Rotterdam-Antwerp to PADD 1 highlight a tight U.S. market,” said George Shaw, oil analyst at Kpler. For Europe, this drives gasoil prices higher to attract supply as seasonal demand rebounds.
Cold weather is adding support, boosting heating oil demand, while a recent spike in natural gas prices could further lift diesel prices.
