All over the world, prices for the fuel are sky-high relative to the crude oil from which it is made, pointing to a scarcity that should alarm inflation-obsessed governments everywhere. And within just a few months, the Northern Hemisphere will enter winter, pushing up demand for heating.
“The outlook for Europe diesel/gasoil supply is tight in our current forecast, driven by the lower diesel/gasoil yields expected from lighter crude slates, the shift to jet yields, and unplanned refinery outages,” said Emma Howsham, a research analyst for refining and oil product markets at Wood Mackenzie. “Demand is expected to increase month-on-month to November.”
It’s unlikely there’ll be a surge in Chinese diesel shipments, even after the quotas have been issued, said Jianan Sun, an oil analyst at Energy Aspects. China’s domestic diesel demand has “surprised to the upside” with higher than expected infrastructure spending offsetting losses from the property market, he added. As a result, stockpiles failed to build even during seasons of weaker demand, said Sun.
In its broadest definition, this type of fuel — which has varying specifications and is used in everything from cars and ships to heating and heavy machinery — is the single biggest chunk of petroleum product demand.