Europe Reaches To Mexico for Diesel
Europe is beginning to show the diesel stress I have been expecting. Roughly 300,000 barrels of Mexican ULSD have reportedly been identified in recent European purchases. I would not assume this represents a single cargo. At roughly 40,000 metric tons, the volume itself does not alter the European diesel balance, but the origin matters. Europe is reaching as far as Mexico for diesel while Russian availability remains restricted and normal Middle Eastern product flows remain impaired. At the same time, despite all the noise US heating-oil crack remains close to $96/bbl despite another weaker session in crude. Crude is responding to the possibility of a Hormuz shipping arrangement between Iran and Oman. Distillate economics are barely responding. For me, Europe sourcing Mexican ULSD while the heat crack refuses to break is a stronger signal than the outright decline in crude.
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