Gasoil Rebounds but Diesel Complex Still Fragile as China Prepares Export Wave
Today’s session delivered a stabilizing move rather than a genuine trend reversal. ICE Gasoil rebounded toward $742.75/mt, nearly a one-standard-deviation move higher from yesterday, but the structure did not follow: backwardation weakened again, confirming that the bounce was order-flow driven against a soft fundamental backdrop. The market is increasingly preparing for a large December wave of Chinese gasoil exports, a scenario we highlighted last week and that now looks inevitable. China’s domestic diesel demand is set to fall about 3% YoY in November, marking the sixth month of contraction, while refiners sit on record crude stocks and are staring at an extraordinary $46.50/bbl heat crack. That combination—weak demand, high margins, and ample crude—has historically triggered heavy product exports before year-end quotas reset.
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