The winter of diesels

Diesel stockpiles globally continue to be the focus of many market participants, as ARA stocks were depleted last week by 1.4 mb, while Singapore and Fujairah stocks dropped by 0.1 mb and Singapore built by 0.6 mb. ARA middle distillate stocks are particularly at risk of dropping below 18 mb, which could send time spreads higher at the prompt as we saw in 2020. Still, after EDF’s disclosure of new nuclear outages for the winter, CIF NWE gasoil prices were bid by market participants. The expected utilization rate of diesel power plants and backup generators was revised markedly higher for this winter, with a now substantial number of hours deemed at physical risk under slightly adverse weather scenarios.