Prices at the Pumps - May 8, 2024 #saltwire #pricesatthepumps #gaspricesLONDON/SINGAPORE/NEW YORK - Profit margins for diesel are slumping as new refineries boost supplies and as mild weather in the northern hemisphere and slow economic activity eat into demand, putting oil prices under further downward pressure.
Brent crude prices slumped to a two-month low of below $82 a barrel on May 8 on rising inventories and slipping demand. They recovered some losses on Thursday, but are on track to lose over 4% so far this month after four months of gains. The difference between U.S. diesel and crude oil, known as a crack spread, eased to a 2-year low of $20 in April at the main trading hubs in New York and the Gulf Coast from above $40 a barrel in February, according to a Commodity Context analysis.RISING OUTPUT, WEAKER DEMAND
JP Morgan noted that road diesel demand in the continent contracted by 50,000 bpd over the past year. Meanwhile slowing factory activity last month in China, the Euro zone and the United States has dragged on diesel demand. While the diesel market is in contango, the crude market is not. Benchmark Brent crude is in backwardation, the opposite of contango, and therefore still signalling market tightness.