In a report despatched to Rigzone by Fitch Group not too long ago, analysts at BMI, a unit of Fitch Options, revealed that they’ve “revised the typical international diesel worth forecast downward, reflecting ample supply-side fundamentals”.
“We venture the worldwide diesel worth for 2024 to common at $107 per barrel versus $110 per barrel in our earlier forecast,” the analysts mentioned within the report.
“We anticipate diesel costs to go decrease in Q2 2024 earlier than choosing up in This fall 2024 when winter units in. Nonetheless, we stay bearish on costs for 2024 since incremental seasonal demand development is not going to be enough to ease the worldwide provide glut,” they added.
The analysts famous within the report that their bearish outlook is supported by the continued slowdown on the earth’s largest European diesel market and structural weak spot in U.S. diesel consumption.
“Weakening diesel costs throughout three key buying and selling areas in Could 2024 recommend the market stays oversupplied,” the analysts mentioned.
“There are restricted prospects for a powerful restoration in diesel costs in Q3 2024 as oversupply will proceed to tug on costs until refiners reply by reducing manufacturing,” they added.
Within the report, the analysts mentioned U.S. diesel costs will proceed to keep up premiums over Asian and European costs in 2024.
“Spot diesel costs in New York continued to commerce at a premium over Rotterdam and Singapore in Q2 2024,” the analysts famous.
“ULSD New York diesel costs averaged at round $115 in April 2024 and continued to weaken to $106 per barrel within the first two weeks of Could 2024. Nonetheless, premiums over Rotterdam and Singapore costs additional strengthened within the first week of Could 2024 with the premium over Singapore costs widening to a mean of $4.1 per barrel,” they mentioned.
“Costs are anticipated to stay underneath strain as U.S. refiners proceed to boost manufacturing since late March 2024. In Singapore and Rotterdam, costs for 10ppm grade proceed to slip beneath $100 per barrel in Could widening their reductions to New York gasoil costs,” they continued.
The analysts mentioned within the report that diesel demand within the first quarter of 2024 fell in most European international locations, “with the most important decline occurring in Poland and Germany, in line with JODI knowledge”.
“France, Europe’s second largest diesel market noticed a steep decline of 9.2 p.c yr on yr to 751,000 barrels per day, whereas Polish demand fell 33 p.c yr on yr to 239,000 barrels per day,” they added.
“Diesel demand is anticipated to proceed going through additional downward pressures as Europe’s largest diesel consuming nation Germany is looking for to chop diesel subsidies for the agricultural sector,” they continued.
Europe’s diesel imports started to fall within the first quarter of 2024 equivalent to sustained weak spot in demand, in line with the analysts.
“Diesel imports from the Netherlands and Belgium, that are key oil distribution and transshipment facilities to the vast majority of European international locations, fell 25 p.c and 5.3 p.c respectively, indicating Europe-wide weak spot in diesel buying and selling actions,” they analysts mentioned within the report.
“We anticipate Europe’s diesel imports will stay subdued till demand recovers in This fall 2024 when winter arrives,” they added.
In a report despatched to Rigzone by Fitch Group again in Could final yr, analysts at BMI projected that the worldwide diesel common would are available in at $100 per barrel in 2024.
“In the long run, rising output from Asia and the Center East is about to make sure the diesel market stays in a wholesome surplus via to 2027,” the analysts famous in that report.
“We see diesel costs persevering with to weaken over the approaching years, averaging $95 per barrel from 2024-2027, as important capability additions in Mainland China and GCC international locations are set to spice up diesel provide,” they added.
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