Gasoil's Dec/Jul Backwardation Surges Near +$242—Just $74 Off All-Time Highs—Splitting Biofuel Margins as Ukrainian Crushers Go Dark
Friday the 13th—lucky in some countries and famously unlucky in others—delivered a stark lesson for biofuel, distillate, and vegetable oil desks that flat price can lie while term structure tells the truth: ICE gasoil's December/July backwardation (GASZ26 - GASN27) surged $30.50 (+14.44%) today to +$241.75 per tonne, sitting just $74 shy of mid-September's +$316 all-time peak even though flat-price December gasoil ($1,281.00/mt, up $31.25 or +2.50%) trades $238 per tonne below Week 38 levels. That aggressive European front-end bid—widening Dec/Jan gasoil by $7.00 to +$49.25/mt and Dec/Apr by $18.75 to +$155.00/mt—diverged sharply from a softer US distillate screen where December NYMEX ULSD (HOZ26) slipped 3.25 cents (-0.76%) to $4.2540 per gallon (trimming the daily WTI heating oil crack to $89.97/bbl alongside January Brent at $95.86/bbl, Brent 1–12 backwardation at +$15.46/bbl, and December WTI at $88.54/bbl), catapulting the transatlantic December gasoil-versus-ULSD spread (GASZ26 - HOZ26*300) up $40.16 in a single session from -$36.20 back to +$3.96 per tonne. Today's International Energy Agency (IEA) November Oil Market Report illustrated the exact disconnect driving the curve: while proclaiming global crude back in surplus (+1.99 mb/d in October at 105.4 mb/d supply, projecting COVID-scale >4 mb/d builds in 2027) even as it warned that European diesel at 77% above pre-war levels (~$180/bbl) remains an "overriding concern" requiring faster emergency stock releases, the IEA needed a +1.38 mb/d "unaccounted for balance" plug in Q3 2026 to shrink -2.02 mb/d of observed stock draws and leaned on +2.8 mb/d of floating oil-on-water in October to mask -1.5 mb/d of onshore OECD draws. Physical distillate supply risks remain acute on both fronts: overnight Ukrainian drones struck Russia's Volgograd refinery—killing four workers and marking seven Russian refineries hit in two weeks—while Washington ruled out an Iran deal and extended the case-by-case MARAD Jones Act shipping waiver by 90 days from November 16 (after US Energy Information Administration data showed renewable diesel's share of US Gulf-to-West Coast waterborne fuel shipments plunged from 95% in 2020–25 to 38% in Jan–Aug 2026 as gasoline blendstocks and jet fuel surged), US Central Command shot down two attack drones off Bahrain, UK Maritime Trade Operations logged another hit near Ras Al Khaimah, Fujairah ship-to-ship transfers froze to five today, and 7-day Strait of Hormuz flows rolled back down toward ~7.5–8.0 mb/d.
For European biodiesel and vegetable oil traders, today's +$31.25/mt ICE gasoil rally collided with a rising Rhine River to flush winter biodiesel paper premiums even as a major physical soft-oil shock hit the Black Sea. Because gasoil outpaced Chicago bean oil by nearly $25 per tonne, December BOGO (ZLZ26*22.046 - GASZ26) tumbled $24.42 (-16.45%) to +$123.99 per tonne—pulling December bean oil down to 109.7% of gasoil while blowing the Dec/Mar BOGO carry out by $15.13 to -$135.42 per tonne. Simultaneously, German federal waterway data (WSV/PEGELONLINE) showed the Rhine at Kaub jumping 25 cm day-on-day (+63 cm off Saturday's 5 cm trough) to 68 cm—just 9 cm below the 77 cm GIW mark—ending the sub-40 cm navigation crisis and putting federal hydrological (BfG) medians on path to surge between 109 and 275 cm from November 18–23 after a 69–77 cm weekend plateau. Stripped of winter inland barge panic, European biodiesel paper differentials broke sharply across 184.4 kt of volume: December RME plunged $64 to +$371/mt over gasoil (Q1 -$30 to +$295/mt, trimming Dec RME/FAME by $15 to +$225/mt while Q1 held at +$80/mt), December FAME 0 fell $45 to +$150/mt, UCOME dropped $28 in December to +$362/mt and $20 in Q1 to +$420/mt (widening Dec/Q1 by $22 to -$72/mt on 36 kt, while lifting Q1 UCOME/FAME by $25 to +$220/mt), and HVO Class II traded 68.4 kt with Q1 down $25 to +$1,325/mt, Q2 up $25 to +$1,375/mt, and 47.4 kt of Dec/Jan printing at -$5/mt. In the physical ARAG barge window (against a $1,289.70/mt gasoil base), a single RME barge traded at +$555.00/mt ($1,844.70/mt flat, -$23.16 d/d), while untraded assessments left FAME 0 at +$145.00/mt ($1,434.70/mt flat, compressing physical RME/FAME to +$410.00/mt after Thursday's spot FAME/SBO gross margin squeezed to +$20.83/mt versus +$518.01/mt on RME/RSO), UCOME at +$335.00/mt ($1,624.70/mt flat, or +$190.00/mt over FAME 0), HVO Class II at +$868.50/mt ($2,510.63/mt flat), and SAF at $2,666.40/mt. Yet flat Northwest European cash soft oil offers—unchanged today at €1,400/t Nov and €1,300/t Dec for Dutch mill rapeseed oil, €1,340/t for Jan Dutch soyoil, and $1,420/t for Dec EU sunoil—have not yet priced in a severe Ukrainian sunseed crush shutdown: Ukraine's largest processor (~9% of pre-war global sunoil output, or 3.5 million tonnes of annual seed capacity) indefinitely halted all eight of its crushing plants after drone strikes hit facilities and tanks, joined by other Odesa and central crushers pausing operations and seed purchases, driving Odesa delivered sunoil up to €1,095/t right as Europe already faces a 1.0-million-tonne domestic rapeseed crop deficit.
Across North America, the inverse margin dynamic dominated biodiesel and soy complex trading as softer NYMEX ULSD and firmer Chicago bean oil expanded BOHO and pushed screen renewable diesel margins back under a dollar per gallon. Building on Thursday's 63.42-cent settle despite the US Dollar Index climbing to a multi-month high of 103.305, December CBOT soybean oil (ZLZ26) gained 0.31 cents (+0.49%, or +$6.83/mt) to 63.73 cents per pound ($1,404.99/mt, up 1.47 cents on the week), with January (ZLF27) up 0.36 cents to 64.02 cents ($1,411.38/mt, putting Dec/Jan at -0.29¢ and Dec/May at -1.23¢), January board crush up a penny at $1.94¼ per bushel, and weekly oil share holding at 49.11%—underscoring how heavily US crushers rely on biomass-based diesel offtake. Against today's pullback in heating oil, December BOHO widened 5.58 cents (+11.86%) to +52.58 cents per gallon (January +5.32 cents to +63.89¢/gal). Even as December '26 D4 RINs ticked up 0.42% to $2.025 (384 lots) and December '27 reached $2.027 (249 lots), that wider BOHO spread dragged screen December RD crush down 6.02 cents (-5.81%) to $0.9756 per gallon (January at $0.8601/gal) and conventional biodiesel crush down 5.71 cents (-2.88%) to $1.9204 per gallon, while spot US RD edged up to $3.594/gal and SAF stood at $5.99/gal. Crucially for RIN and margin positioning into the EPA's December 4 SRE reallocation comment deadline, the EIA's November Short-Term Energy Outlook (Table 4d- https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf) trimmed its 2027 domestic renewable diesel production forecast to 0.27 mb/d (~4.14 billion gal/yr) alongside 0.11 mb/d (~1.69 billion gal/yr) of biodiesel—a domestic run rate generating roughly 730 to 800 million D4 RINs per month (and still shy of 900 million/month even adding 0.051 mb/d of SAF and other biofuels), leaving a structural 2027 compliance deficit that requires imports or waivers to close. Highlighting the physical scramble for low-CI feedstocks while US Gulf delivered UCO holds at 69.5 cents per pound (~$1,532/t) and USDA Minnesota FOB yellow grease averages 46.25 cents (~$1,020/mt; Southern California delivered at 67.00¢/lb), a major West Coast RD refiner locked in long-term ISCC-certified UCO supply from ~45,000 restaurant locations, a global agribusiness launched a novel fuel-oilseed genetics joint venture, and world inedible corn oil exports jumped over 20% to a record 0.76 million tonnes (led by Brazil doubling Jan–Oct exports to 231 kt) to turn the US into a net corn oil importer.
In Asia, palm oil notched its biggest weekly gain in nearly three months as the Bali industry conference wrapped up with bullish 2027 supply warnings and confirmation of a new Indonesian state export fee, even as deeply negative prompt POGO continues to subsidize regional biodiesel blending. Active January BMD crude palm oil rose 0.50% to settle at 4,462 ringgit per tonne, lifting USD swaps $11.75 to $13.50/mt across the curve ($1,116.75/mt Nov, $1,142.50/mt Dec, and $1,173.50/mt Q1 '27) and narrowing cash-matched December BOPO near +$262.50/mt (+$274.49/mt on prior settles), even after Malaysia's Palm Oil Board lowered its December CPO reference price to 4,260 ringgit/mt while holding the export tax at 10%. For discretionary PME and PSME blenders, prompt POGO remains deeply negative at -$167.25/mt on November swaps and -$94.25/mt on December swaps (closer to -$140/mt against tonight's live ICE gasoil surge, before flipping to +$0.25/mt in Q1 '27 and +$91.50/mt in Q2 '27). That prompt palm discount faces a tightening 2027 balance: Bali conference projections centered on global palm oil output dropping 2.7 to 3.0+ million tonnes in 2027 (with Indonesian production seen falling 3.0 mmt, or -3% YoY, to 59.9 mmt and CPO down from 56.4 mmt to 54.7 mmt) as El Niño drought and fertilizer cuts push trees directly from high yield into a February–November low-yield cycle while 2026/27 global vegoil demand growth (+6 mmt) outstrips supply (+4 mmt)—pointing BMD futures toward 4,500–5,000 ringgit/mt through April and Malaysian RBD palm olein toward $1,300/mt FOB in 1H 2027 unless reopening of the Strait of Hormuz and Black Sea (where 50%–60% of sunflower oil exports are bottled up) drops gasoil and releases trapped soft oil. Adding export friction starting in January, Indonesia's new state resource agency, Danantara Sumberdaya Indonesia (DSI), confirmed it will charge a single-digit dollar-per-tonne service fee on palm oil exports (exact rate due in December), while East China domestic UCO held flat at ¥7,400/t standard and ¥7,700/t premium as northern Chinese HVO and SAF processors paused buying (leaving Chinese FOB SAF at $2,000–$2,050/t and HVO at $1,795–$1,815/t).
Rounding out soy complex flows and interior US logistics, fresh export flash sales met tighter Chinese import inspections and lingering Lower Mississippi draft traps, leaving biofuel and vegoil traders squarely focused on next week's compliance data and the warning in the gasoil curve. Today the USDA confirmed 354,000 tonnes of 2026/27 US soybean export sales (134 kt to China, 120 kt to Vietnam, and 100 kt to unknown destinations), yet China is officially making CIQ port inspections more rigorous right as state stockpiler Sinograin rotates ~3.5 million tonnes of reserve soybeans through fresh auctions (204 kt offered this week with negligible volume cleared), firming Dalian soymeal spreads while Brazilian Paranaguá December paper soyoil basis remains discounted at -920/-980. On US inland waterways, the USDA's latest Grain Transportation Report showed weekly downbound grain barge rates dropping across all seven segments—putting six of seven corridors more than 10% below their 90-day moving averages, led by Cairo–Memphis at $13.48/ton (-31.4%) and St. Louis at $21.87/ton (-18.3%)—yet NOAA and NWS LMRFC stage forecasts show Memphis (-0.4 feet, Day 20 below the 0.0-foot low-water mark) barely touching 0.0 to +0.1 feet on Sunday before sliding back below zero Tuesday toward -7.0 feet by December 10, keeping lighter-load restrictions alive. Heading into a catalyst-packed stretch—featuring Monday's holiday-delayed CFTC positioning report, Wednesday's RVO weighting split update (Nov 18), Thursday's final 2025 EPA compliance data (Nov 19), and upcoming October EPA EMTS RIN generation figures—biodiesel, renewable diesel, and vegoil desks should respect what ICE gasoil is signaling: Dec/Jul backwardation does not surge back near +$242/mt while flat price sits $238 off its highs unless physical distillate barrels remain dangerously tight, warning bears to tread very carefully here.
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