Prompt NYM ULSD margins extend advance from the 2Q seasonal bottom
July 2, 2024
Key Observations:
The prompt NYM ultra low sulfur diesel crack advanced by $1.20 per barrel today to settle at $27.64 per bbl. On a closing basis, this price is the widest margin since Apr. 8. The momentum extends the breakout we spotlighted about two weeks ago and compares to closing prices around $23 per bbl a month ago (Diesel cracks are exiting the repair shop, 14-Jun-2024).
Diesel cracks are also strengthening in: (1) the ICE futures market across the strip, and (2) cash prices in major physical hubs in Europe and Asia.
(1) The prompt ICE gasoil crack, for example, settled today at $21.75 per bbl. That’s a $2.92 per bbl advance from Friday’s monthly close and compares to $16.09 per bbl at the seasonal low on Apr. 30—a margin that partially reflected the Jun-24 ICE Brent (COM4) expiry that day.
(2) Frontline Singapore diesel cracks are presently trading closer to $19. However, that spread embeds a product leg (now $104 per bbl and rising) that has priced above $100 per bbl since June 18 and a crude input cost that closed above $85 per bbl (Dubai) both yesterday and today.
These price movements are product demand led and likely to sustain through 3Q2024. To be sure, emergence of the earliest-ever Category 5 Atlantic Hurricane (Beryl) also underscores the clear risks to Gulf Coast oil and gas infrastructure over the next 16 to 20 weeks.
Monitor: VLO, PSX, MPC.
Source: NYM, ICE, Blacklight Research.
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