Story
Diesel Refining Margins Tumble 7% as Russian Output Recovers
Diesel refining margins, a key indicator of refiner profitability, tumbled 7% on Tuesday amid signs of improving supply as Russian refineries ramped up output and France prepared to release fuel from its strategic reserves.
Market Details
The premium for low-sulphur gasoil futures over Brent crude futures, a proxy for diesel refining margins, fell by $5.60 to settle at $73.90 per barrel as of 17:06 GMT, according to market data. The decline signals an easing of the supply tightness that has recently supported high profits for producing the fuel.
Supply Pressures Mount
AdTwo key factors are weighing on the market, pointing to increased diesel availability in the near term:
- Russian Output Rebounds: Russian refineries increased their crude processing rates by 25% in the second half of October compared to the first half of the month, according to three industry sources. This recovery follows a period of disruption caused by drone attacks.
- France Taps Reserves: The French government plans to release 10 million barrels of diesel from its strategic reserves starting November 1. The move is intended to lower retail fuel prices, which have risen amid higher energy costs linked to geopolitical tensions.
Further details on the French release emerged on Tuesday. A spokesperson for the French fuel industry lobby Ufip stated that fuel retailers will not be required to replenish the stocks drawn from the reserves. The spokesperson added that the decision was made by French Prime Minister Sebastien Lecornu.
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